Reversal of Common Input Tax Credit

[HITESH DEDHIA]

Reversal of Common Input Tax Credit under GST is required for Exempted Supplies/Services. The Company has earned Interest on Loans & Advances/Deposit. Whether Interest income is considered as exempted for Calculation of Proportionate Exempted Sales to Taxable Sales.

[DR.MARIAPPAN GOVINDARAJAN]

In my view it is not. It is applicable to the exempted supply of goods/services or both.

[KASTURI SETHI]

Answer is yes. It is normal/routine interest. The amount of interest earned on account of default payment/delayed payment is taxable under GST. See the definition of taxable value under Section 15 of CGST ACT, 2017

[DR.MARIAPPAN GOVINDARAJAN]

The interest is not on default but on loans and advances.

[KASTURI SETHI]

Dr.Govindarajan Sir,. I agree with you in toto.

[Himansu Sekhar]

Loan is not a service. Interest is also not a supply at all.

[YAGAY andSUN]

Interest does not fall under the category/definition of supply.