Reversal of gst under rule 42
This query is : Resolved
03 December 2018
CLIENT IS ENGAGED IN MANUFACTURING ACTIVITY OF OIL PROCESSING. IN WHICH KHAL(OIL CAKE) IS ONE OF THE OUTPUTS. CLIENT IS CLAIMING WHOLE INPUT TAX CREDIT BUT NOW KHAL IS EXEMPTED GOODS . NOW WHAT IS THE PROCESS OF ITC REVESAL??? I HAVE A CONFUSION IN T2 AMOUNT WHICH IS GIVEN IN RULE 42
03 December 2018
I will try to explain your query with an example .
Suppose - Total input used by your client in the manufacturing is amounting to Rs 1500/- and GST rate on input is 12 %. :– Rs 180 [ T = 180]
Inputs used for activities other that business :– Rs 200 GST @ 12% =Rs. 24. [T1= RS 24]
Inputs used for exempted goods : – Rs 500 GST @ 12% =Rs. 60. [T2= RS 60]
Inputs used for blocked credit item : – Rs 100 GST @ 12% =Rs. 12. [T3= RS 12]
Inputs used for taxable supplies ( including zero rated ) : – Rs 500 GST @ 12% =Rs. 12. [T4= RS 60]
TOTAL INPUT GST IDENTIFIABLE :- RS 156 [ 24+60+12+60]
Unidentifiable Inputs :- C2 = 24 C2 = T-[ T1+T2+T3+T4] = 180-[156 ] = 24
This Rs 24 need to be calculated in proportion of exempted output to total output .
Suppose Total output is Rs 3000/- and exempted output is Rs 1000/-
Amount to be added back will be :- 24*1000/3000 = Rs. 9.20
Further 5 % of C2 ( unidentifiable inputs ) RS. 1.20 also to be added back in your outstanding liability
Hope this will clear your understanding for Rule 42
Suppose - Total input used by your client in the manufacturing is amounting to Rs 1500/- and GST rate on input is 12 %. :– Rs 180 [ T = 180]
Inputs used for activities other that business :– Rs 200 GST @ 12% =Rs. 24. [T1= RS 24]
Inputs used for exempted goods : – Rs 500 GST @ 12% =Rs. 60. [T2= RS 60]
Inputs used for blocked credit item : – Rs 100 GST @ 12% =Rs. 12. [T3= RS 12]
Inputs used for taxable supplies ( including zero rated ) : – Rs 500 GST @ 12% =Rs. 12. [T4= RS 60]
TOTAL INPUT GST IDENTIFIABLE :- RS 156 [ 24+60+12+60]
Unidentifiable Inputs :- C2 = 24 C2 = T-[ T1+T2+T3+T4] = 180-[156 ] = 24
This Rs 24 need to be calculated in proportion of exempted output to total output .
Suppose Total output is Rs 3000/- and exempted output is Rs 1000/-
Amount to be added back will be :- 24*1000/3000 = Rs. 9.20
Further 5 % of C2 ( unidentifiable inputs ) RS. 1.20 also to be added back in your outstanding liability
Hope this will clear your understanding for Rule 42
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03 December 2018
Further 5 % of C2 ( unidentifiable inputs ) Did not get this point mam
03 December 2018
It means :-If common inputs and input services are used partly for business and partly for non-business purposes, the amount of credit attributable to non-business purposes be denoted as ‘D2’,
It shall be equal to five per cent. of C2 .
( Applicable only if inputs used for partly for business and partly for non business purpose)
It shall be equal to five per cent. of C2 .
( Applicable only if inputs used for partly for business and partly for non business purpose)
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