ITC on Exempted item

[Subhas Prasad]

Dear Sir

Good Evening

I want to know that if any one dealing with Exempted item means the final product is exempted in GST but the some of consumable item are taxable then he should claim her ITC or not

[Rajagopalan Ranganathan]

Sir,

If the consumables are part and parcel of the final product supplied which is exempted, then you cannot avail ITC of tax paid on consumables.

[DR.MARIAPPAN GOVINDARAJAN]

You cannot avail ITC.

[Yash Jain]

Dear Sir,

The plain reason for non availment for ITC is that as your are not liable to Pay GST, then also not eligible to claim ITC, as it will be revenue loss to government.

Regards

[Ganeshan Kalyani]

When the final product is exempt it breaks the chain of input tax credit. Otherwise only value addtion to the product gets taxed. You cannot claim input tax credit on the consumables. It is actually a tax burden. But it is fact.

AI Summary

Input tax credit restriction: ITC cannot be claimed on inputs used in making an exempt final product, making such tax unrecoverable. Input tax credit is not available where the outward supply is exempt; consumables that are part of an exempt final product break the ITC chain, making tax paid on those consumables non-recoverable and a cost to the supplier rather than a recoverable credit.