Common ITC reversal under GST

[Muthukumar Muthunarasimhan]

Dear Experts,

As per ITC reversal of common input and input services and capital goods used for manufacturing taxable and exempted supplies by the manufacturer in one GSTIN. Apart from manufacturing turnover there is some traded value of the same taxable products.

My query pertains, as per formula of common ITC reversal , total turnover means inclusive of traded turnover should be included or excluded. Kindly clarify.

[Amit Agrawal]

Under formula prescribed in Rule 42 & 43, ‘F’ is the total turnover in the State of the registered person during the tax period.

Neither Section 17 (1) & (2) nor above rules talks about separate calculations between manufacturing & non-manufacturing supplies OR business-segment wise calculations.

So, total turnover - in the fact of your case - will include value of supplies from trading as well as manufacturing activities.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Ganeshan Kalyani]

Trading turnover also to be considered for the purpose of common credit calculation.

AI Summary

Input tax credit reversal: total turnover includes trading supplies, so trading turnover must be included in common ITC calculation. For common ITC reversal under the prescribed apportionment formula, total turnover for the tax period means the registered person's aggregate supplies in the State and must include turnover from trading activities; no separate manufacturing only or business segment calculation is envisaged, so trading supplies are aggregated with manufacturing supplies when determining the denominator for allocation of common input tax credit.