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

Eligibility to Claim ITC Denied for Taxable Consumables Used in GST-Exempt Final Product Production A query was raised regarding the eligibility to claim Input Tax Credit (ITC) on taxable consumables used in the production of a GST-exempt final product. Four responses clarified that ITC cannot be claimed in such cases. The reasoning provided was that since the final product is exempt from GST, claiming ITC would result in a revenue loss for the government. The chain of input tax credit is broken when the final product is exempt, which means ITC on consumables cannot be availed, resulting in a tax burden.