CBIC issues Clarification on Availability of ITC on Ducts & Manholes in OFC Network

The Central Board of Indirect Taxes and Customs (CBIC) clarified that input tax credit (ITC) is not restricted for ducts and manholes used in optical fiber cables (OFCs) networks under sections 17(5)(c) or 17(5)(d) of the CGST Act. The Cellular Operators Association of India (COAI) raised concerns over denial of ITC by tax authorities, citing these components as immovable property not eligible for credit. However, CBIC's clarification asserts that ducts and manholes are essential for OFC networks, akin to plant and machinery under CGST Act definitions, which excludes only specific immovable property types. This clarification aims to prevent unnecessary litigation in the telecommunications sector regarding ITC eligibility. The OFC network relies on these components for installation, connectivity, and maintenance, thus supporting their classification as 'plant and machinery' eligible for ITC. This decision is crucial for ensuring clarity and compliance within the telecommunication industry.