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Manner of ITC Reversal of Common credit of Input and Input Services
In GST Law provision has been made for reversal of ITC of Common credit of Input and Input Services used commonly between Taxable Business Supplies, Non business Supplies and Exempt Supplies . Below is the clarification with example on the relevant provision:-
Common Terms to be used
| Type of Input Tax | Denotation | Eligibility to take Credit |
| Total Input tax involved on inputs and input Services in a tax period , Credited in Electronic credit ledger (Total Credit) | TC | |
| Amount of input tax used exclusively for Non business Purpose(Exclusively Personal Use) | EP | No ITC available |
| Amount of input tax used exclusively for Exempt Supply and Non-taxable Supply (Exclusively Exempt) | EE | No ITC available |
| Amount of input tax on which credit is not available under Sec 17(5) (Blocked Credit) | BC | No ITC available |
| Amount of input tax used exclusively for Taxable Supply including Zero Rated Supply (Exclusively Taxable) | ET | 100% ITC Available |
| Type of Input Tax | Denotation | Computation |
| Total Eligible Credit | EC | EC= TC-EP-EE-BC |
| Credit to be Shared between Taxable Business Supplies, Non business Supplies and Exempt Supplies (Common Credit ) | CC | CC=EC-ET |
| Credit pertaining to Exempt Supplies out of Common Credit (CC) | |
| Total Turnover during the period | TT |
| Exempt Turnover during the period | ET |
| Common Credit pertaining to Exempt Supplies (CCE) | (ET/TT)*CC |
| Credit pertaining to Non-Business Supplies (Personal) out of Common Credit (CC) | |
| Common Credit pertaining to Non Business Supplies(CCP) | 5%*CC |
| Credit pertaining to Business Supplies including Zero rated Supplies out of Common Credit (CC) | |
| Common Credit pertaining to Business Supplies (CCB) | CC-CCE-CCP |
Example 1
| Particulars | Turnover/ Outward Supply | Purchase Inward Supply | IGST paid on Inward Supply @5% | ||
| Supply of Branded Cereals | 3000 | 2500 | 125 | ||
| Export of Branded Cereals (Zero Rated Supply) | 200 | ||||
| Supply of Non Branded Cereals (Exempt Supply) | 500 | 400 | Nil (Exempt being non branded) | ||
| Petrol and Diesel (Non taxable Supply) | 550 | 500 | NIL (out of GST ) | ||
| Total | 4250 | ||||
| Total Taxable Outward Supply (Including zero Rated Supply) | 3200 (3000 + 200) | Total Exempted Outward Supply | 1050 (500 + 550) | ||
| Total Supply | 3200 +1 050 = 4250 | ||||
| Details of Other Inputs and input Services which are used commonly for both Taxable as well as Exempt Supplies | |||||
| Particulars | Amount | GST Paid | |||
| Construction of Office – Blocked Credit 17(5)(d) | 20 | 3.6 | |||
| Other input and Input Services liable to GST (5% assumed) | 110 | 5.5 | |||
| Total | 130 | 9.1 | |||
Computation
| Type of Input Tax | Denotation | |||
| Total Input tax involved on inputs and input Services in a tax period , Credited in Electronic credit ledger (Total Credit) | TC =134.1 (9.1+125) | |||
| Amount of input tax used exclusively for Non business Purpose(Exclusively Personal Use) | EP =0 | |||
| Amount of input tax used exclusively for Exempt Supply and Non taxable Supply (Exclusively Exempt) | EE =0 | |||
| Amount of input tax on which credit is not available under Sec 17(5) (Blocked Credit) | BC =3.6 | |||
| Amount of input tax used exclusively for Taxable Supply including Zero Rated Supply (Exclusively Taxable) | ET =125 | |||
| Type of Input Tax | Denotation | Computation | ||
| Total Eligible Credit | EC | EC= TC-EP-EE-BC
EC=134.1-0-0-3.6 EC= 130.5 |
||
| Credit to be Shared between Taxable Business Supplies, Non business Supplies and Exempt Supplies (Common Credit ) | CC | CC=EC-ET
CC= 130.5-125 CC=5.5 |
||
| Credit pertaining to Exempt Supplies out of Common Credit (CC) | ||||
| Total Turnover during the period | TT =4250 | |||
| Exempt Turnover during the period | ET =1050 | |||
| Common Credit pertaining to Exempt Supplies (CCE) | (ET/TT)*CC
(1050/4250)*5.5 1.358 |
|||
| Credit pertaining to Non-Business Supplies (Personal) out of Common Credit (CC) | |
| Common Credit pertaining to Non Business Supplies(CCP) (Assumed not used for Personal Purpose) | 5%*CC
0 |
| Credit pertaining to Business Supplies including Zero rated Supplies out of Common Credit (CC) | |
| Common Credit pertaining to Business Supplies(CCB) | CC-CCE-CCP
5.5-1.358-0 4.142 |
| Total ITC Available ET+CCB | 125+4.142=129.142 |
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