TaxTMI 
TaxTMI 
Dear Expert,
We are using preservatives for manufacturing food items in taxable as well as exempted goods. Please suggest formula to claim ITC on purchase/consumption of preservative.
REGARDS,
WADHWA
ITC claim on preservative used in taxable and exempted goods
29 Nov 2022 
4 Replies 
1403 Views Asked by
Input tax credit apportionment: pro rata allocation or invoice-level identification determines eligible credit; reversal required for exempt use.
Input Tax Credit on preservatives used for both taxable and exempt goods must be separated: if preservative use for exempt supplies is identifiable at invoice level that portion must be reversed; otherwise apportion ITC using the ratio of taxable turnover to combined taxable and exempt turnover and reverse the balance attributable to exempt use, with the reversal disclosed in the periodic returns. (AI Summary)
Input Tax Credit on preservatives used for both taxable and exempt goods must be separated: if preservative use for exempt supplies is identifiable at invoice level that portion must be reversed; otherwise apportion ITC using the ratio of taxable turnover to combined taxable and exempt turnover and reverse the balance attributable to exempt use, with the reversal disclosed in the periodic returns. (AI Summary)