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Exempt supply

04 August 2020

hi, the question is we sell agricultural seed which is exempted so we are eligible to an input tax credit if not then any provision available for input tax reversal in our account.

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Sagar Patel (Tax and Business Consultant) (11611 Points)
Replied 04 August 2020

If You are dealing exclusively in exempt Supplies than , no ITC is allowed to you because you are already enjoy 0% GST. ITC cannot be claimed for inputs/capital goods/service used in such exempted goods as it will lead to negative taxation.

In case you are dealing in both exempt as well as taxable goods , than ITC of exempt supplies, amount of credit as attributable to exempt supplies shall be reversed.

How to determine the credit attributable to exempt supplies in the above case?

Credit attributable to exempt supplies = (A/T) x C

Where,

A = Aggregate value of exempt supplies (all supplies other than taxable and zero-rated supplies)

T = Total turnover of the person in the tax period

C= Common Credit

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SUMIT BADYAL (709 Points)
Replied 05 August 2020

I don't understand that the previous year our CA take full input credit on a purchase, but now he has said that we are not eligible to take input credit....any notification comes out regarding this whose business related to agriculture-related

Ravi SADhiyan (Practice) (4510 Points)
Replied 05 August 2020

Originally posted by : SUMIT BADYAL
	I don't understand that the previous year our CA take full input credit on a purchase, but now he has said that we are not eligible to take input credit....any notification comes out regarding this whose business related to agriculture-related

You ask to your CA related to provision and notification on the basis he avail ITC.

CA. Heet Shah (Tax Consultant & Practitioner) (6180 Points)
Replied 05 August 2020

Originally posted by : SUMIT BADYAL
	I don't understand that the previous year our CA take full input credit on a purchase, but now he has said that we are not eligible to take input credit....any notification comes out regarding this whose business related to agriculture-related

Refer section 17 of chat which does not allow ITC on exempt supply . It is from initial as such