itc reversal

[SHASHI MITTAL]

we have composite unit of cotton gining & oil mill unit ,we purchase raw cotton & pay gst on rcm basis & take itc on gst paid as Rcm,In gining unit two product emerge one is cotton bales & cotton seed, both are taxable but if we further process cotton seed ,2 products emerge one is cotton seed cake which is exempt & 2nd is cotton oil which is taxable ,so we need to reverse credit on cotton seed cake ,as per the turnover of cotton seed cake but how in gst 3b???

AI Summary

ITC Reversal under GST for Cotton Ginning & Oil Milling: Proportional to Exempt Cotton Seed Cake Turnover. Consult CMA. A discussion on a forum involves a query about Input Tax Credit (ITC) reversal under the Goods and Services Tax (GST) for a composite unit dealing with cotton ginning and oil milling. The issue arises from processing cotton seed into two products: exempt cotton seed cake and taxable cotton oil, requiring ITC reversal based on the turnover of the exempt product. Responses suggest reversing ITC in proportion to the turnover of the cotton seed cake relative to total turnover or based on consumption records. Consulting a Cost and Management Accountant (CMA) is recommended for accurate ITC computation.