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Input credit query

23 January 2020

The Co is providing exempt service during the year, the Co has sold few fixed asset on which tax has been paid,also the Co has paid rcm on certain service can they claim input tax credit of rcm against sale of fixed asset?

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2 Replies

Anup Agarwal (1184 Points)
Replied 23 January 2020

In context of Rule 42 of CGST Rules 2017, if you have paid tax under RCM on certain service that has been used to effect exempt supply, then you can not avail credit for the same.

If services were exclusively availed for taxable supply, than you can avail credit of tax paid under RCM.

If services were used for both exempt supply and for taxable supplies than credit Shall be proportionate.

In nutshell if services were not used to effect taxable supply of sale of fix assets, you can not avail credit of tax paid under RCM on such services.