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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