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GST ITC availablity

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Pious Antony

15 Points Posted on 08 June 2021

The company has availed GST credit from TRAN1 for procuring leased asset and the same has still outstanding balance in the credit ledger. Subsequently on Jan 2020, CBIC has exempted gst on supply of lease by government undertaking. Currently company is supplying exempt supplies. My question is that whether the company needs to reverse the proportionate amount of ITC availed with the exempt supplies made?

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Quick Summary

This discussion explores whether a company needs to reverse Goods and Services Tax (GST) Input Tax Credit (ITC) previously claimed on leased assets. The company availed ITC before a government exemption on lease supplies took effect. Now, with exempt supplies being made, the question is whether this prior ITC needs to be reversed proportionally.

CMA Poornima Madhava

CMA

13117 Points Posted on 08 June 2021

As I understand, the exemption would be prospective in nature, in which case, no need to reverse ITC for the period when the exemption was not effective.