If more than one business vertical are under same GSTIN itself, while applying Rule 42 for ITC Reversal- Total Turnover of entire GSTIN to be taken or same can be split into segment wise also ?
For ex:- Say, under one GSTIN there exists three Business Vertical - Hotel, Courier & Plastic. Hotel vertical has taxable and exempt supplies to calculate ITC Reversal for common input credit can we use the following
Common ITC (of Hotel Vertical) * Exempted Supply in Hotel Vertical
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Total Supply of Hotel Vertical
Or We have to consider the Total supply of all vertical (for the denominator)
Experts advice Please.
Clarification on Rule 42: ITC reversal must consider each business vertical individually under a single GSTIN for accurate calculation. A query was raised regarding the application of Rule 42 for Input Tax Credit (ITC) reversal when multiple business verticals operate under a single GSTIN. Specifically, the question was whether the total turnover for ITC reversal should consider all business verticals collectively or individually. The discussion involved a hotel, courier, and plastic business under one GSTIN. It was clarified that ITC should first be attributed to each vertical, and then the formula should be applied to calculate ITC reversal. The examples provided demonstrated how to allocate ITC among taxable and exempt supplies within the hotel vertical. (AI Summary)
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