Dear Sir, If a company has Total Sales for Rs 20 cr. Taxable sale is 15 cr. Exempt sale is Rs 5 cr. Total ITC is Rs 12 cr.
Query- Can a company reverse proportionate ITC as follows :-
12 * 5/20 = 3 cr. So, ITC to be reversed will be Rs 3 cr.
Whether above way of ITC reversal is correct ??
Frah Saeed Changed status to publish June 16, 2020
This would hold good in case of common eligible credits of inputs and input services as per Rule 42 of the CGST Rules, 2017.As regards capital goods the things are bit complicated as per Rule 43..
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Frah Saeed Answered question June 10, 2020