Mam, With respect to my query mentioned in link-https://www.taxwallah.com/questions/question/gst-on-rent-02/
You replied that — I can avail ITC but cannot utilise ITC on goods with Output GST on Rent.
Query- I am engaged in both Trading and Renting service. I charge GST @ 18% on Rent & 5% GST in Trading activity . And till now I adjust ITC from business from Output Rent also.
As GST is “one nation one tax” and there is no distinction in sequence of Utilisation of goods or Utilisation of services, so can we adjust ITC of goods with Output GST on Rent ??
2) If no to above, Pls tell the section reference where utilising ITC of goods with Output GST on Rent is prohibited ??
Thanks…
For ITC it is basic Rule in Section 16 of CGST Act that ITC can be availed only for taxable supplies made. Further if any expense is specifically related to exempt supply it is disallowed, for common credit pro rata reversal is required.
ITC concept is to ensure tax is levied only on value added. How you can avail ITC of expense related to other business against output liability to which such expense is not at all related, though within same GSTIN.
In our view this will be against spirit of GST law and Deptt. will definitely object to this.
Team Clearmytax.in