The Indian government is discussing easing restrictions on for construction used for a company's own business, a move that could significantly reduce costs for large industrial investments and infrastructure projects.
2017
GST Launch Year
⏳ Time Machine
How today’s news fits into the bigger picture
July 2017
GST Implementation
India launched the with the aim of creating a unified national market and simplifying indirect taxation. Initially, ITC on immovable property was largely blocked to prevent misuse and ensure revenue stability.
2018-2020
Industry Representations
Various industry bodies and chambers of commerce consistently made representations to the GST Council, highlighting how the blocked ITC on 'own-use' construction was inflating costs for businesses.
February 2024
Budget Discussions
The Union Budget 2024-25 saw renewed calls from the manufacturing and infrastructure sectors for rationalization of GST ITC rules, specifically mentioning the issue of own-use construction and its impact on 'Make in India'.
April 2026
GST Council meeting deliberations
A preliminary discussion within the GST Council brought up the issue of blocked ITC on construction, with several states acknowledging the need for reform to boost investment, but concerns over revenue impact remained a key point of contention.
Today
Government is discussing easing GST input tax credit on construction for a company's own business use.
What happens next?
A formal decision could be announced in an upcoming GST Council meeting, potentially leading to significant cost reductions for industrial projects.
The Indian government is reportedly considering a significant policy change to ease the blocking of Goods and Services Tax (GST) input tax credit (ITC) on construction services used by companies for their own business purposes. Currently, businesses cannot claim ITC on GST paid for building their own factories, offices, or other infrastructure assets. This potential reform aims to reduce the overall cost of large industrial and infrastructure investments, which is currently inflated by non-adjustable GST. The move is expected to boost capital expenditure, particularly in manufacturing and real estate, by making such projects more financially viable and competitive.
💭 If you're wondering…
ITC allows businesses to reduce the tax they pay on their sales by the amount of tax they have already paid on purchases of goods and services used for their business. It prevents a 'tax on tax' effect.
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Official sources
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