Suppose, Company A purchase wheat i.e exempted no input. They produced atta maida for sale which is also exempted no output.
But they purchase capital goods for example machinery parts, electrical goods etc. They got the input against the capital goods. Now they sold the jute bag(where they carry the wheat) @ 5%.
For example, They received Input Tax Rs 10 and the output tax against the sale of jute bag Rs 5. Now for itc reversal need to adjust the output with the input or not??
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ITC Reversal
Replies (2)
They would have already claimed itc while purchasing jute bag..so according to me you are not eligible for itc on capital goods because it is not covered under common Credit... the parts which you purchase for machinery are used only for processing excempted goods not taxable goods.
yes it need to be reverse
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