Is ITC available on Lift Installation Charges under GST?

In accordance with Section 16(1) of the CGST Act 2017, every registered taxable person is entitled, subject to the conditions and restrictions prescribed by the CGST Act 2017, to take credit for input taxes incurred when supplying goods or services to him that are used or intended to be used in the course of his business, and the said amount will be credited to his electronic credit ledger. 

However, the Appellate Authority of Advance Ruling (AAAR) of Maharashtra, stated that Input Tax Credit (ITC) under GST cannot be claimed on the Installation Charges of Lifts/Elevators. 

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AAR concluded that the lift under question is immovable property since it was erected, commissioned, and installed. Based on section 17(5)(d) of the CGST Act, 2017 the Appellant was not entitled to an input tax credit for the charges paid to the lift contractor.

In line with section 16(2)(b) read with sections 17(5)(c) and 17(5)(d) of the CGST Act, 2017, the AAAR consisting of Sanjeev Kumar and Rajesh Kumar Sharma upheld the AAR's decision and ruled the Appellant would not be eligible to claim the ITC for the GST paid on lift installation charges paid to the lift contractor.

Certain situations are listed in Section 17(5) of the CGST Act 2017 that block the credit and prevent input tax credit from being claimed. In accordance with Section 17(5)(d), when a taxable person receives goods or services for the construction of immovable property (other than machinery or plant) on his own account, including when the goods or services are used for the furtherance of his business, they are subject to tax.

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