Office refurbishment costs eligible for input tax credit, rules AAR

24 Aug 2021 CW Team

Authority for Advance Rulings (AAR) ruled that the costs incurred for the refurbishment of offices can be eligible for input tax credit.

The ruling is set to create some confusion around the availability of tax credit under the goods and services tax (GST) framework.

Recently, Gujarat AAR ruled that the input tax credit is admissible on new locker cabinets and generators.

The tax credit can be utilised to set off future tax liabilities.

For now, only the cost that adds to the output of a firm — raw materials, input services, machinery, is available for input tax credit.

The new ruling comes when various firms across the nation have shifted their offices and have incurred expenditure on repair, renovation, temporary fittings, etc., amid the Covid-19 pandemic. According to tax experts, these companies can now take this decision to claim tax credits.

Tax experts told the media that, however, credit of goods and services used for repair and renovation of offices has always been a subject matter of litigation over the years essentially because it is difficult to determine what qualifies as immovable and what as plant and machinery.

Harpreet Singh, partner, indirect tax, KPMG, India, told the media that many dealers are availing input credit of new modular furniture, fixtures, fittings, cables, generators, etc.

with the plea that same can be quickly moved/ installed at various places, without being damaged and therefore do not result in immovable property.

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