Please provide a solution

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mani bharathi

6 Points Joined June 2019

Im into a Travels company, i purchased a vehicle for my business and hence had an ITC of Rs 2,00,000 for the year 2019-20. since the ITC was used for making exempt supplies for the whole year, i reversed the ITC to the extent of Rs 2,00,0000 while filing GSTR9.
Now my question is - what if in succeeding years if i make taxable supplies, is there any option i can reclaim my ITC which was reveresed previously, since i am making taxable supplies in future.
Or is that, the ITC was applicable only for the year 2019-20 and therefore it cannot be reclaimed?

Replies (3)

Mujeeb Doi

309 Points Joined June 2017

As per section 18(1)(d), in such case ITC can be claimed in such case on the date immediately preceeding the date on which supply becomes taxable. However, for capital goods the ITC should be reduced by 5% per quarter or part of the quarter.
The above provision in your case will be applicable only if you are using that vehicle (now for taxable supply) for the purpose allowed u/s 17(5) blocked credit for motor vehicles. If, now you are using the vehicle for pupose other than the exception provided u/s 17(5) then the ITC will any way be blocked.

CA Rashmi Gandhi

Chartered Accountant

86505 Points Joined April 2011

You can claim ITC as per Rule 42. You have to reverse ITC in 60 equal instalments in ration of exempted supplies over total supplies.

Mujeeb Doi

309 Points Joined June 2017

The rule of 60 monthly installment calcuation is relevant for reversal of ITC already claimed, when the supplies which were then taxable has now become exempted.