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Relating to ITC

16 May 2019

There is one bussiness men, whose bussiness is to produce khod(animal food for cow and buffalo) and cotten oil......

Khod is totallly exampted under gst. And cotten oil is taxable.

..For the production of that two product row matririal used is cotten seeds(which is taxable) so his parchuse is fully taxable....

....and the problem is that
His input is totally taxable but output is totally exampted ,so the itc credit has not been utilised every year.
So is there any possibilities to take that itc credit.or refund of itc.
And unutilised itc is around 40000-50000

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9 Replies

Padmanathan Kv (2127 Points)
Replied 16 May 2019

Where outward supply is exclusively exempt supply, whole No ITC will be available. Where outward supply is partly taxable and partly exempt, reversal of ITC has to be made as per rule 42.

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CA Haritha Komma (Chartered Accountant) (1147 Points)
Replied 16 May 2019

ITC on exempted outward supply is eligible as refund only when the product is exported without payment of duty..

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Mitu Sinh Chauhan (20 Points)
Replied 16 May 2019

sir but
.we are not explorting the goods.

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 16 May 2019

Originally posted by : Mitu Sinh Chauhan
	sir but.we are not explorting the goods.

Refund not available for the said ITC....

Padmanathan Kv (2127 Points)
Replied 16 May 2019

Raja sir, and the credit has to lapse no?

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RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 16 May 2019

Originally posted by : Padmanathan Kv
	Raja sir, and the credit has to lapse no?

Yes...

As per sec 54 (3) of CGST act refund not available..

Section 54 of CGST Act 2017: Refund of Tax (CHAPTER XI – REFUNDS

- (3) Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input tax credit at the end of any tax period:

Provided that no refund of unutilised input tax credit shall be allowed in cases other than–

(i) zero rated supplies made without payment of tax;

(ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council:

Provided further that no refund of unutilised input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty:

Provided also that no refund of input tax credit shall be allowed, if the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid on such supplies.

Padmanathan Kv (2127 Points)
Replied 16 May 2019

thanks for clarifying sir

CA Aravind Penugonda (Chartered Accountant) (311 Points)
Replied 16 May 2019

Since you are effecting both taxable and exempted supplies, ITC is restricted only to the extent of taxable supplies made. Balance ITC shall be reversed.