TaxTMI 
TaxTMI 
ITC reversal sec.(42) or not.
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....TC reversal sec.(42) or not.<br> Query (Issue) Started By: - Yash Jain Dated:- 14-4-2019 Last Reply Date:- 16-4-2019 Goods and Services Tax - GST<br>Got 5 Replies<br>GST<br>We are engaged in Raw Cotton Ginning Pressing and Cotton Seed oil mill factory. We buy Raw Cotton From farmers and are required to pay RCM. (RCM was suspended but Raw cotton RCM was started again as per notif. 43/2017 - centra....
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....l tax (rate) - 14-11-2017. The output Products are cotton bales - Taxable @5% and Cotton Seed @5%. Cotton Seed is sold to oil Mill. We have our own mill. After crushing output products are oil@5% and Cotton seed oil cake ( cattle feed) - Tax free (as per notification 27/2017 dt. 22-09-2017. Now the question is, are we people liable to do reversal of itc under section 42(3) of RCM ITC and other....
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.... ITC on monthly basis or we do not need to reversal. People are having different opinion. It is said that we not liable to do reversal. Some say it is Tax free supply - so no reversal needed. Some say it is Non GST supply - so no reversal needed. Some say it is NIL rated supply - so no reversal needed. Few are saying that they will claim refund after filing annual return GSTR 9. Please clari....
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....fy this matter as CA's are also divided on this issue. Reply By SHARAD ANADA: The Reply: Reversal is required as per sec 17(2) of CGST ACT 2017. Sec 17(2) is reproduced here under (2) Where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and pa....
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....rtly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies. Also refer Rule 42 (reversal for input and input services) and Rule 43 (reversal of capital goods) of CGST Rule 2017 Reply By SHARAD ANADA: The Reply: Cotton seed oil cake is Nil rated supply a....
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....nd not Non GST supply. Nil rated supply under GST is covered under definition of exempt supply. Refer sec 2(47) (47) "exempt supply" means supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and Services Tax Act, and includes non-taxable supply. You are not eligible for refund o....
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....f unutilized ITC u/s 54 Reply By KASTURI SETHI: The Reply: Yes. Reversal is required. Non-GST supply is not in picture here. Reply By Ganeshan Kalyani: The Reply: The reversal is required as required under section 17. Reply By Yash Jain: The Reply: Thank you everyone for prompt reply. Two more queries regarding section 42. 1. according to rule, reversal is required each month and interest ....
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....for short reversal is calculated from next fy 1apr. If we do whole year reversal in March only, will we invite interest penalty month wise.?? 2. In case reversal is done excess, we need to claim refund. What docs will be required for it, like audit report/ gstr 9 / 9c.<br> Discussion Forum - Knowledge Sharing ....