Question
Whether a Building contractor can claim INPUT TAX CREDIT ON CONSTRUCTION of single Resident unit for his customer on with material basis in post 01-04-2019 and also after 01-04-2019.

ANSWER

Law Applicable:
(i) N/N 12/2017 exempts:
Services by way of pure labour contracts of construction, erection, commissioning, or installation of original works pertaining to a single residential unit otherwise than as a part of a residential complex

(ii) As per N/N 03/2019-CT(Rate), the term ‘ongoing project’ shall mean a project which meets all the following conditions, namely-
(a) commencement certificate in respect of the project, where required to be issued by the competent authority, has been issued on or before 31st March, 2019, and it is certified by any of the following that construction of the project has started on or before 31st March, 2019:-
(i) an architect registered with the Council of Architecture constituted under the Architects Act, 1972 (20 of 1972); or
(ii) a chartered engineer registered with the Institution of Engineers (India); or
(iii) a licensed surveyor of the respective local body of the city or town or village or development or planning authority.

(b) where commencement certificate in respect of the project, is not required to be issued by the competent authority, it is certified by any of the authorities specified in sub- clause (a) above that construction of the project has started on or before the 31st March, 2019;

(c) completion certificate has not been issued or first occupation of the project has not taken place on or before the 31st March, 2019;

(d) apartments being constructed under the project have been

Explanation.- For the purpose of sub- clause (a) and (b) above, construction of a project shall be considered to have started on or before the 31st March, 2019, if the earthwork for site preparation for the project has been completed and excavation for foundation has started on or before the 31st March, 2019.

Interpretation:
(i) Availability of ITC depends on whether the Contractor is providing Pure Labour Contracts or Works Contract. Pure labour contracts are exempt under N/N 12/2017.
(ii) Also, availability of ITC depends on whether the Construction Project falls under the category of Ongoing Project or not. If yes, the Builder has opted for the Old scheme or for the New Scheme.
If the builder has opted for the Old Scheme, then he is eligible to take ITC.
If the builder has opted for the New Scheme, then he is not eligible to take ITC.

Conclusion:
(i) Pure labour contracts- Exempt
(ii) Works Contract started before 01/04/2019 and ongoing project:
a. Opted for Old Sceme- Can claim ITC
b. Opted for New Scheme- Cannot claim ITC