ITC on Taxable as well as Exempted Supplies

[POOJA AGARWAL]

One of our client is engaged in providing taxable as well as exempted supplies; however there are no common Input Goods or Services used for providing exempted supplies; still whether ITC is required to be reversed u/s 17(2).

[Padmanathan KV]

The information as to nature of taxable and exempt goods or service etc... are insufficient to come to a concrete conclusion.

However, It is highly unlikely that there is no common credit. There maybe some common expenditures such as fees paid to consultants, audit fee, rent, security charges etc in the usual course of business which are attributable to both supplies. Kindly check this aspect.

Hypothetically there is no such common credit, then no reversal is required under sec 17(2)rule 42/43.

[Shilpi Jain]

In case no common credit exists then no requirement to compute the reversal as set out in rule 42.

However, ensure that you have completely reversed the credits that are used exclusively for exempt supplies.

[POOJA AGARWAL]

Thank You experts

AI Summary

Input tax credit reversal: no apportionment required where no common credit exists, but exclusive exempt credits must be reversed.
If no common input goods or services are used for exempt supplies, no requirement to reverse ITC under section 17(2) arises; nevertheless credits exclusively used for exempt supplies must be fully reversed, and taxpayers should review common overheads (fees, rent, security, audit) for potential apportionment and retain supporting records.