Availability of ITC on Ducts, Manholes Used in OFCs Under Section 17(5) of CGST Act

The CBIC recently clarified the availability of ITC on ducts and manholes used in the OFC network. In this article, we will explore the availability of ITC on ducts and manholes in OFC and discover what is covered in GST Circular No. 219/13/2024.

Is ITC on Ducts Available to Taxpayers?

ITC on ducts is available to taxpayers, provided they adhere to GST regulations. Specifically, ducts used for optical fibre cable networks are eligible for ITC if they are utilised in the course of a taxable supply of goods or services. To claim the credit, taxpayers must ensure proper documentation, including tax invoices and proof of use for taxable supplies.

Is ITC on Manholes Used in OFC Network Available?

Yes, ITC on manholes used in the OFC network is available. Recent clarification confirms that these items qualify for ITC despite previous concerns that they were considered immovable property under Section 17(5) of the CGST Act.

What is Covered by GST Circular No. 219/13/2024

GST Circular No. 219/13/2024 clarifies that ITC on ducts and manholes in India used for optical fibre cable (OFC) networks is permissible. It addresses concerns that such ITC might be barred under Section 17(5) of the CGST Act, which restricts credit for immovable property. The Circular confirms that ducts and manholes, being essential components of the OFC network and used for telecommunication services, fall under the definition of "plant and machinery" and thus qualify for ITC.

To sum up, it is evident that ITC on ducts and manholes used in OFC is available in India. As per the GST Circular No. 219/13/2024, these items are categorised under “Plant and Machinery” under the Section 17(5) of the CGST Act.