Question 50: A construction assessee constructs flats and building using its own money. No advance is received before completion certificate since buyer is not identified. Once building is ready, he sells the flats by finding potential buyer.

Pls help us understand -

1. Can he take input of such inputs on purchase of construction material even though he will have no output liability since possession after completion before taking advances is exempt in GST'

2. If answer to above is yes & If he also has a rental income on same GSTIN, can he set off these inputs with output of rental income since he is a contractor, he should be allowed credit of inputs and since he presently has no outputs of construction, output of rentals be adjusted with these inputs for single Delhi GSTN'

Answer Let us make your question very simple and universal so that it can be applied to other supplies also There are two question as follow

1 Whether the ITC can be availed on exempted supply

2 Whether the ITC of one supply can be used to pay liability of other supply

Our point wise reply is as follow

Answer 1 The ITC can be availed only if the inputs are used to provide taxable out put supply so credit is not available

In some cases if the supplier takes credit on the inputs or input service or capital goods which are used as common for providing taxable and not taxable supply then the credit is required to be reversed as per the provision given is section 17 of CGST ACT

Answer 2 There is no one to one co relation of inward and outward supply so credit taken on one can be used to pay tax of other You are requested to please see master chart of GST given in flowchart of Law crux GST This will make the concept of GST more clear

The path is open home page ->click the flow chart icon now the detail of flow chart will open now click the master chart of GST

For any help call support number or mail us We are here to help you.(REPLY dt. 25/1/2018)