Reversal of ITC on capital goods from over all sales 80% supply is exempted

[PN ELAMPARRUTHY]

During audit asking to reversal the Common credit . Basically firm is Rice Mill,Sale of rice in Above 25 KG. any case related or any AAR

AI Summary

Reversing ITC on Capital Goods: Proportionate Reversal Required for Exempt Sales in Rice Mills Under GST Rules A discussion on a forum addresses the issue of reversing Input Tax Credit (ITC) on capital goods for a rice mill, where 80% of sales are exempt under GST. The original query highlights that the firm has not reversed any ITC since 2018-19, despite most sales being exempt. Respondents advise that if goods or services are used for both taxable and exempt products, ITC must be reversed proportionally to the exempt turnover. Additionally, it is suggested that if the firm exports rice, ITC may still be eligible due to zero-rated supply provisions.