REVERSAL PROPORTIONATE ITC

This query is : Resolved

Suresh S. Tejwani (Querist)
Follow

10 April 2026 A capital asset is purchased for use in both taxable and exempt supplies. There were no exempt supplies for the initial few months after purchase, but exempt supplies were made later. While calculating proportionate ITC reversal, should the calculation consider the entire period from the date of purchase, or only the months in which exempt supplies were made?

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
Follow

10 April 2026 You don’t escape ITC reversal just because exempt supply came later — GST tracks usage, not timing. • ITC on capital goods is spread over 60 months
• No reversal until exempt supply begins
• Once it begins → proportionate reversal starts
• Calculation is based on full ITC lifecycle, not limited months
As per Rule 43 of CGST Rules, ITC on capital goods is spread over 60 months. Reversal is required only from the month exempt supplies commence, but the calculation is based on the total ITC apportioned over the entire useful life. Hence, it is not restricted only to months of exempt supply, but computed using monthly common credit (ITC ÷ 60).

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Summarize this with AI

ChatGPT Perplexity Claude Google AI Grok

Similar Resolved Queries

Unanswered Queries

Popular
Recent

Trending Online Classes

Direct Tax Laws & International Taxation May 26,Sept 26 & Jan 27

CA Arvind Tuli

Enroll Now
Audit Fast Track Recorded Batch For May 26,Sept 26 & Jan 27

CA Aarti Lahoti

Enroll Now
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English

CA Bhanwar Borana & CA Shubham Keswani

Enroll Now

view all classess

Meet our CAclubindia PRO Members

RAJENDRA PARAKHI

kambamcr@gmail.com

Sidhartha sankar pillai

P.S.Satya narayana

J.Vijai

Subscribe Now

REVERSAL PROPORTIONATE ITC

Similar Resolved Queries

Trending Online Classes

Meet our CAclubindia PRO Members

Quick Links

Browse by Category

Latest Job Openings

Article Assistant

Manager- Finance and Compliance

CA Final

GST CONSULTANCY

GST CONSULTANT

Accountant