Controversy Over Input Tax Credit in Real Estate Leasing

FICCI and Assocham urge the finance ministry to allow Input Tax Credit (ITC) for real estate developers on commercial assets constructed for leasing purposes. The move, overriding a Supreme Court ruling, aims to support the real estate sector's growth despite potential revenue impacts.

Industry associations FICCI and Assocham are pressing for real estate developers to claim Input Tax Credit (ITC) under the CGST for commercial assets built for leasing, as detailed in letters to the finance ministry.

The bodies argue that permitting ITC will not drastically affect revenue, but instead help uphold the credit chain and stimulate growth in the real estate sector and economy. Concerns arose following a Budget amendment to the CGST law, potentially contradicting a Supreme Court decision regarding ITC on leased properties.

FICCI suggests the finance ministry clarify ITC eligibility in lease-oriented property construction under CGST, akin to the Safari Retreats case judgement. The issue ties to a Budget amendment proposing retroactive CGST law changes, negating earlier Supreme Court decisions, which awaits legislative approval.