ITC for Ducts, Manholes in OFCs u/s 17(5)(c) or (d) of GST Act Not Restricted: GST Council

ITC for Ducts - Manholes in OFCs - us 17(5)(c) or (d) of GST Act - GST Council - TAXSCAN

The Union Finance Minister Nirmala Sitaraman presided over the 53rd meeting of the GST Council on 22nd June 2024 at in New Delhi with Revenue Secretary and CBIC Chairman.

The GST ouncil recommended clarifying that input tax credit is not restricted in respect of ducts and manholes used in network of optical fiber cables (OFCs), under clause (c) or under clause (d) of sub-section (5) of section 17 of CGST Act.

Under the GST regime in India, Input Tax Credit is generally available for goods and services used in the course or furtherance of business, subject to certain conditions and restrictions as specified under section 17(5) of the GST Act. Sections 17(5)(c) and (d) specifically list out items for which ITC is restricted.

Section 17(5)(c) and (d) of the Act: These subsections of the GST Act specify certain goods and services for which input tax credit is restricted. For instance, section 17(5)(c) pertains to goods or services used for construction of an immovable property (other than plant and machinery), while (d) relates to goods or services received for construction of plant and machinery.

Optical Fiber Cables (OFCs) require supporting infrastructure like ducts (tubes that encase OFCs) and manholes (access points to OFCs). These are essential for the installation and maintenance of OFCs.

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As per the latest recommendation, the input tax credit for ducts and manholes used in OFCs is not restricted under sections 17(5)(c) or (d) of the GST Act. This implies that businesses involved in the telecommunications sector, specifically in the installation and maintenance of OFCs, can claim input tax credit on ducts and manholes as they are integral to their business operations.

Businesses involved in the installation, maintenance, or operation of OFC networks can claim ITC for GST paid on ducts and manholes. These components are considered integral to the telecommunications infrastructure and are not typically restricted under GST laws, provided they are used for business purposes.

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Ducts and manholes are considered part of capital goods or inputs necessary for providing telecommunications services. Therefore, GST paid on these items can be offset against GST liability on output services or goods, facilitating smoother compliance and reducing tax costs for businesses.

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