Itc reversal

sec 17 disallowed to itc on exempted goods which is not going to u r credit ledger.
if u do not define specific credit i.e. common credit need to reverse on prorata basis.

if u use inputs exclusively for supply of exempt goods or services , credit of such input is not transfered to El. credit ledger so no question arises of its reversal

however if u use same input for providing taxable as well as exempt supply, then only u will need to reverse itc on apportionment basis.

Hello Harshad/Raj,

Thanks for your reply.

Pl understand the business as below-

ABC Bearing is generating revenues from various stream in many states. Out of the total servcies rendered, few are taxable & few exempted services under GST. Company maintains its books of accounts separately of Input/Output for exempted/taxable services.

My concern is that whether company should reverse GST input only for exempted services i.e. INR 10 in above example or should it reverse the ITC in below manners-

(Total ITC*Exempted Turnover)/Total Turnover (Exempted+Taxable) i.e.

INR {(80+10)*100}/1000= INR 9

No need to use rule 42 to calculate ITC reversal on exempt supplies when you axactly know the amount i.e rs.10