Subsidy from Govt.

[Kaustubh Karandikar]

XYZ Ltd. receiving subsidy from government on which as understood no GST is payable. In that case, are they required to proportionately reverse the Input Tax Credit taken on common goods and services?

AI Summary

No GST Reversal Needed for XYZ Ltd. on Government Subsidy; Subsidies Not 'Exempt Supply' for ITC Reversal. XYZ Ltd. receives a government subsidy on which no GST is payable. A query was raised about whether they need to proportionately reverse the Input Tax Credit (ITC) taken on common goods and services. Two respondents, Ganeshan Kalyani and Kasturi Sethi, agreed that no reversal is required. They clarified that subsidies are considered non-supply or no-supply, which do not fall under the definition of 'Exempt Supply' for the purpose of ITC reversal. Therefore, there is no need for XYZ Ltd. to reverse the ITC.