Reversal under Rule 42

[Rajesh Kumar]

Sir/madam

if a supplier of FMCG products most of which are taxable except some goods like unbranded rice sells his goods. Should he reverse the ITC in respect of sell against exempted supply? Or he can say that as the purchase of said exempted goods is itself without ITC, accordingly he sells without passing ITC . So there is no involvement of ITC therefore no reversal required.

AI Summary

FMCG Supplier Queries ITC Reversal under GST for Exempt Supplies; Experts Discuss Proportionate Reversal and Common Expenses A supplier of FMCG products, primarily taxable except for some exempt items like unbranded rice, inquires about the reversal of Input Tax Credit (ITC) under GST for exempt supplies. One expert suggests that if purchases for exempt supplies are clearly identifiable, proportionate reversal is not needed. Another expert notes that common expenses, such as rent and consultancy fees, require credit reversal. A third expert concurs with the previous opinions. The final expert emphasizes that specific ITC for exempt supplies, like packaging, is ineligible unless procured separately; common ITC requires proportionate reversal.