Rule 42, 43 reversal

we supply taxable and exempt goods and services and we can identify input raw material for exempt supplies but we cannot identify office expenses like stationary, etc. in this regard is required to calculate ITC reversal as per rule 42, 43?
Replies (2)
Quick Summary
This discussion clarifies the application of ITC reversal rules 42 and 43 for businesses supplying both taxable and exempt goods/services. It explains that common input tax credit, including office expenses like stationery, needs to be reversed if it cannot be directly attributed to taxable supplies. The post outlines the calculation process for Rule 42, detailing how to determine the proportionate credit related to exempt supplies and a 5% allowance for non-business purposes.

if you have supplies of both taxable & exempt supplies 

and there is some common ITC then yes You need to calculate 

Rule 42 for the inputs or input services 

Rule 43 for the capital goods inputs 

Calculation (Rule 42) 

Total inputs                                                                                                  xxx

Less : exclusively for non business purpose                                         xxx

Less : exclusively for exempt supplies                                                    xxx

Less : Blocked credits u/s 17(5)                                                              xxx

ITC transfer to e-credit ledger                                                                xxx

Less : ITC on exclusively taxable supplies 

             (including ZERO RATED supplies)                                             xxx (A)

Common ITC                                                                                            XXX

Less : Proportionate credit related to exempt supplies 

             (Common credit * exempt supplies / total turnover )            xxx (B)

Less : ITC related to non - business purposes 

            (5% of Common Credit )                                                          xxx (C) 

Balance eligible credit                                                                         XXX (D)

 

NOTE : ITC reversed (B+C)

             ITC eligible and availed (A+D) 

 

 

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
30 September 2026
Senior Accountant

Codeboard Technology

Chennai

B.Com

View Details
Company
18 September 2026
Accounts & Finance Specialist

ULTRA CHEMICAL WORKS

Thane

CA Final

View Details
Company
15 September 2026
Client-site CA associate

Aditya Muley and Co

Mumbai

CA

View Details
Company
22 September 2026
Account Assistant

Chirag P Shah & Co. Chartered Accountant

Pune

B.Com

View Details
Company
ARTICLESHIP 07 October 2026
Article Assistant

Malhotra Rajesh & Associates

New Delhi

B.Com

View Details
Company
10 October 2026
Accounts Associate Level 1

Abic and Mani Chartered Accountants

Kottayam

B.Com

View Details
Company
ARTICLESHIP 18 September 2026
Industrial Trainee

Twenty Point Nine Five Ventures Private Limited

Noida

CA Inter

View Details
Company
16 September 2026
Internal Audit - Team Lead

Consulting & Beyond

Chennai

CA

View Details