Dear sir,
we are in process of manufacturing corn flakes and cattle feed.
1. corn flakes @ 5% GST
2. cattle feed is nil rated
for packing material we follow process where we take complete credit for packing a material used in corn flakes packing.
we dont take any credit for nil rated supplies.
is this the right approach ?
Discussion on Input Tax Credit for Corn Flakes and Cattle Feed Using Rule 42 of CGST Rules. A forum discussion addressed the issue of claiming Input Tax Credit (ITC) for a business manufacturing corn flakes and cattle feed, where corn flakes are taxed at 5% GST and cattle feed is nil rated. The business takes full credit for packing materials used for corn flakes but not for cattle feed. Respondents agreed this approach is correct, suggesting that other credits, like consultancy services, should be proportionate to corn flakes turnover using Rule 42 of CGST Rules. If packing costs are identifiable separately, full ITC for corn flakes can be claimed, and full reversal for cattle feed. (AI Summary)
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