TMI BlogReversal of Proportionate ITCX X X X Extracts X X X X X X X X Extracts X X X X ..... XYZ is supply product A which is taxable and therefore charging GST. XYZ also buying Product B which is attracting Nil duty as per tariff. The same they are supplying without charging GST since attracting Nil GST. Is XYZ required to reverse proportionate ITC against supply of product B without GST, even if at the time of purchase itself it was attracting Nil GST? - Reply By Rajesh Kum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar - The Reply = As per Section 17(2) of the CGST Act, 2017 read with Rule 42 43 of the CGST Rules, 2017 , proportionate ITC to be reveres to the common ITC not whole ITC according to the ratio of exempted supply turnover. XYZ is required to reverse the common ITC proportionate to exempted turnover during every month and finally on yearly basis. - Reply By KASTURI SETHI - The Reply = ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dear Sh.Rajesh Kumar Ji, How can we integrally link such transaction ( wholly and separate supply) in this scenario for the purpose of reversal on pro rata basis ? Will you please throw more light ? - Reply By KASTURI SETHI - The Reply = Framing of any law involves language game and we need to know the art of hermeneutics to decode the query and arrive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at concrete and correct conclusion.Sh.Kaustubh Karandikar's queries are not a cake walk.His queries are always thought provoking and we learn a lot from his queries. These outpours are not baseless. - Reply By Kaustubh Karandikar - The Reply = Thanks Rajesh and Kasturi Sir for your advice. Kasturi Sir, in fact i am learning many new things from your detailed and justified answers given b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y you from time to time. - Reply By KASTURI SETHI - The Reply = Dear Sir, It is your humbleness. A great personality is always humble. Your queries open new vistas. Drafting a query with a difference is an art. - Reply By KASTURI SETHI - The Reply = Dear Sir, Knowledge in any field should always be true, correct, complete and justified otherwise one cannot get desired resul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. If knowledge is half-baked, untrue unjustified, that knowledge will be meaningless. Rather it will yield harmful results. Just sharing with you as a gesture of good will. Hope you will agree. - Reply By Kaustubh Karandikar - The Reply = Yes Kasturi Sir, fully agree with your views. - Reply By Ganeshan Kalyani - The Reply = Sir, in my view, the reversal of input tax credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not required because the purchase was itself NIL rate or exempt. The reversal is required if input used commonly for the supply of taxable and exempt goods. Sec. 2(47) defines exempt supply as supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11 , or under section 6 of the Integrated Goods and Services Tax Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t , and includes nontaxable supply; . As per this definition exempt includes NIL rate of tax as well. - Reply By Kaustubh Karandikar - The Reply = Ganeshan Sir, thanks for your reasoned reply. However, in my view, the reversal of ITC for common services is required under Rule 42 and 43 of CGST Act, 2017 , if the taxable person is having both taxable and exempted supply. Since one of the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pply is exempted, reversal is necessary. The reversal provision is linked with outward supply and no relation with inward supply. - Reply By Rajagopalan Ranganathan - The Reply = Sir, Product A is taxable supply and product B is exempted supply Only when tax paid inputs are used in the supply of products A B the question of proportionate reversal of ITC availed will come into play. Since pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oducts A B are supplied separately and no common inputs are used for such supply the question of propoertional reversal if ITC doesnot arise. - Reply By KASTURI SETHI - The Reply = I concur with the views of Sh.Ranganathan, Sir and Sh.Ganeshan Kalyani, Sir. - Reply By Shilpi Jain - The Reply = The definition of inputs is very wide under GST. it can be any goods that are used in business.. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... So any common expenses in nature of goods or services will have to be reversed proportionately - Reply By KASTURI SETHI - The Reply = If we say reversal is required in this scenario, it is stretching the GST law. - Reversal of Proportionate ITC - Query Started By: - Kaustubh Karandikar Dated:- 20-9-2022 Goods and Services Tax - GST - Got 13 Replies - GST - Discussion Forum - Knowledge Shari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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