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Itc reversal

Rishi M (Student) (40 Points)

28 January 2018

Total Turnover- Inr 1,000

Taxable Turnover- 900

Exempted Turnover- 100

Gst nput on supplies for taxable turnover- 80

Gst Inputs on supplies for exemped Turnover- 10/

How much Gst ITC, we need to reverse-

Inr 10 pertaining to exempted supplies or on prorata basis?

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4 Replies

Harshad S Gholap (Auditor) (116 Points)
Replied 28 January 2018

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.

Raj Chaurasia (273 Points)
Replied 29 January 2018

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.

Rishi M (Student) (40 Points)
Replied 30 January 2018

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