Dear All:
A newly built rice mill purchased capital goods for converting paddy to rice and took credit of all ITC via 3B, which is still available in Electronic Credit Ledger. Question is - production commenced only after 6 months of its (capital goods) purchase, now the goods being sold are both exempted (rice) as well as taxable (Rice Bran) supplies, how to avail proportionate ITC now?
To be more specific about the query, ITC claimed around few lakhs in June last year from the purchase of capital goods and it is still available in Electronic Credit Ledger, as the production has just commenced in December 2023. As per the rule, when the capital goods are used for production of exempted and taxable, only proportionate ITC should be taken. Around 75% of the output supplies are exempted and the remaining is taxable, so, should 75% of the available ITC be reversed in December 3B? or is there any other calculation for taking proportionate ITC? Hope you understand my query. Please advise
CAclubindia
