Dealer is constructing a Hotel with 100 rooms, banquet, retaurant, bar and other facilities. Whether Input credit will be allowable on GST paid on construction material of hotel and GST paid to Contractor for constructing hotel. If yes whether whole GST will be allowable as input credit or it has to be apportined in ratio of accommodation and others or otherwise. Whether input credit will be available on Furniture, Accessories, Plant and Machinery please enlighten about the input credit available on Building, Furniture, Fixture, Plant and Machinery of new hotel building.

Reply— 

 As per Section 16 of CGST Act, Every registered person shall entitled to take Input tax credit on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business.

However section 17(5) of CGST Act, 2017, restrict Input tax credit on few goods and services.

ITC on construction of Hotel building—As per section 17(5)(d) of CGST Act, Input tax credit shall not be available in respect of goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business.Thus, taxpayer is not entitled to take Input tax credit for construction of hotel building. 

However decision held by ORISSA HIGH COURT in case of Safari Retreats Private Limited dated 17.04.2019, ITC will be allowed in respect of goods or services used for construction of immovable property for letting out.

ITC on purchase of Furniture, accessories and plant and machinery— As it is not restricted u/s 17(5), Input tax credit can be availed.