ITC On Construction Expenses – A Macro Outlook On Bones Of Contention!!!

'The strictest law sometimes becomes the severest injustice – By Benjamin Franklin'

Every Indirect Taxation system contains a credit / set-off mechanism to avoid cascading effect of taxes incurred at previous stage. The credit mechanism which should be smoothest for the taxpayers, has been the most debated topic in Indian Indirect Tax laws. The credit framework should be wide in ambit with least exceptions. Yet the law makers choose to keep long list of goods and services outside the basket. With the advent of Goods and Services Tax ('GST') regime, the taxpayers expected a sigh of relief on this front, but the reality is far distant.

One of the important credit restrictions in earlier as well as today's times is on goods and services used for 'construction and works contract for construction'.