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of <h1>ITC Reversal and Attribution Rules for Mixed Business Use under CGST Act Sections 42 and 43 Explained</h1> Rules 42 and 43 of the CGST Act, 2017 govern the determination and reversal of input tax credit (ITC) on inputs, input services, and capital goods used partly for business and partly for exempt or non-business purposes. Rule 42 details the attribution of ITC on inputs and input services, requiring registered persons to calculate common credit and reverse amounts related to exempt supplies and non-business use, with specific provisions for real estate projects and timelines for final adjustments. Rule 43 addresses ITC on capital goods, prescribing the method for attributing credit over the useful life of five years, adjustments for exempt supplies, and project-wise allocation when capital goods are used across multiple projects. Both rules mandate declarations and reversals in prescribed GST returns, with interest liabilities on excess claims, ensuring compliance with GST input credit norms and facilitating accurate credit utilization in mixed-use scenarios.
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