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

[KASTURI SETHI]

Pl. elaborate your query. It is too short to reply correctly.

[PN ELAMPARRUTHY]

purchased plant machinery for processing of paddy into rice and husk . rice mostly exempted product and its by product husk and some 5 kg and 10 kg sales happening . for Eg from total Turnover 5 cr means 50 lakhs only taxable . from 18-19 not reversed any ITC ..

[Shilpi Jain]

If you have used any goods or services commonly for taxable and exempt product then you would have to reverse credit of GST in proportion of the exempt turnover.

[Padmanathan KV]

I agree with experts. Also see if your client is exporting rice. Even if exempted, credit will be eligible towards zero-rated supply.

AI Summary

Input tax credit apportionment required where supplies are largely exempt, with proportionate reversal or export exception.
Where capital goods are used commonly for taxable and exempt supplies, ITC must be apportioned and the portion attributable to exempt supplies reversed in proportion to exempt turnover; credit attributable to zero rated supplies (such as exports) remains eligible and need not be reversed.