Reversal of ITC in case of Nil Rated Supply of Goods

[DS Pal]

Dear Experts,

We have imported Oats Grains from outside India and Sold the same domestically apart from some other taxable supplies. Since the said items falls under HSN 1004 in Schedule I (List of Nil Rated Goods), we have not charged GST on sale and accordingly declared as Nil rated supply in GST return. Is there any reversal of ITC required in such scenario? Please given reference if yes/no.

Thank you

AI Summary

Company Must Reverse ITC on Nil Rated Oats Sales, Including Common Expenses, Per Rule 42 & Sections 17(1) & (2) CGST Act. A company inquired about the requirement to reverse Input Tax Credit (ITC) when selling imported oats grains domestically as a Nil rated supply under GST. Experts responded that ITC reversal is necessary, not only for directly related supplies but also for proportionate common inputs like rent and consultancy fees, as per GST rules. They referenced Rule 42 and Sections 17(1) & (2) of the CGST Act, 2017, indicating that expenses related to exempt supplies are not eligible for credit, and common expenses should be claimed proportionately to taxable turnover. An unrelated reply was mistakenly included in the discussion.