Availing ITC however outward is exempted

[Rajesh Kumar]

Sir/Madam

Please enlight when party is availing ITC however outward supplies are exempted.

By this way, ITC is getting accumulated as No duty is payable .

1) Is there any provision which restricts the availing of ITC this way ? Or

2) is there any time limit till then, the said ITC to be reversed ?

We know that availing of ITC is not penal-able till its utilisation. As per department, party should not avail ITC when its outward supplies are exempted and to reverse the same under section 74(5) of the CGST Act, 2017.

AI Summary

Exploring Input Tax Credit Reversal Requirements for Exempt Supplies Under GST: Legal Insights and Compliance Challenges A discussion on a forum addresses the issue of availing Input Tax Credit (ITC) when outward supplies are exempt under GST. The main query is whether ITC should be reversed if it remains unutilized due to exempt supplies and if there are legal provisions for such reversal. Responses indicate that ITC is not eligible for exempt supplies unless related to exports. While accumulating ITC is not immediately penalized, the law requires reversal under certain sections if ITC is ineligible, even if unutilized. In real estate, monthly and project completion reversals are necessary, with potential penalties for non-compliance.