ITC Reversal

[Puneet Arora]

Hi Sir

I want to know some queries:-

Hello Sir

We have exported with 0 rated supply & we have received some exempted income like, Duty Draw Back, MEIS Licences, & SAD refund

our query is

what we will reverse the proportionate input tax credit again exempted income received , Duty drwa back, SAD REFUND , Licences.

Puneet

AI Summary

Input tax credit reversal: duty drawback/SAD refunds differ from MEIS licence sales, affecting ITC reversal obligations.
Duty drawback and SAD refund are refunds of duties previously paid on exports and thus do not trigger input tax credit reversal. Sale proceeds of MEIS licences are treated as exempt supplies under Notification No. 35/2017 Central Tax (Rate) and generally require proportionate input tax credit reversal, although an alternative view contends that MEIS/SEIS scrips as export incentives may not necessitate reversal if a direct nexus between inputs and taxable supplies is demonstrated, with Rule 42 cited as not mandating reversal in such cases.