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

Clarification on ITC Reversal: No Need Under Section 17(2) If No Common Inputs for Exempt Supplies Exist. A client is involved in providing both taxable and exempt supplies under GST, raising a query about whether Input Tax Credit (ITC) needs to be reversed under Section 17(2) when no common input goods or services are used for exempt supplies. Respondents suggest that while it's unlikely there are no common credits, if truly none exist, no reversal is required under Rule 42/43. However, it is advised to ensure all credits used exclusively for exempt supplies are fully reversed. The discussion emphasizes verifying if any common expenditures apply to both supply types.