TaxTMI 
TaxTMI 
Input Tax Credit Reversal
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....nput Tax Credit Reversal<br> Query (Issue) Started By: - kodhanda Ramakrishna Dated:- 20-2-2019 Last Reply Date:- 23-2-2019 Goods and Services Tax - GST<br>Got 2 Replies<br>GST<br>A Company is a manufacturing company primarily manufactures Sponge Iron, Billets and TMT Bars which are falling under chapter 72 and applicable GST rate is 18%. Each product has separate manufacturing divisions namely Sp....
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....onge Iron Division, Steel Melting Shop (SMS) Division and Rolling Mill Division respectively and collectively called as Integrated Steel Plant (ISP) and final product is TMT Bars. The company has a captive power plant with a capacity of 60 MWH. The basic raw materials for power plant are Coal/Coal fines, Char and Waste Heat generated from Sponge Iron Division. 15MWH from waste heat generated from ....
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....sponge iron division, 5MWH from char which is also generated from Sponge Iron Division. The power generated is being used captively for Integrated Steel Plant (ISP) and nominal amount of power being sold outside through Indian Energy Exchange (IEX). Under GST Law Power is an exempted commodity vide entry no 104 of Notification No. 2/2017-Integrated Tax (Rate) dated 28th June 2017. The present aver....
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....age power generation is 35 MWH. Out of 35MWH, 5MWH is being sold outside and 30 MWH is captive consumption. whether the company required to reverse ITC in proportion to sale of power? If so what could be the base for reversal of ITC? Reply By KASTURI SETHI: The Reply: Yes.Proportionate reversal of ITC is required in terms of Section 17(1) of CGST Act, 2017 and formula/manner is prescribed in Ru....
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....le 42 of CGST Rules, 2017. Reply By Ganeshan Kalyani: The Reply: Yes, proportionate input tax credit is to be reversed.<br> Discussion Forum - Knowledge Sharing ....