Latest Query & Reply

Dear sir,

In my client case, He has business of Mkka Pvva where he is using Makka as exempt input and Packing Material as taxable item. Now he is making Makka Pavva out of maize. Maize is exempt input. Out of this input he is yielding Makka Pavva as Taxable item and its By product Churi animal feed which is exempt.

as he is getting churri as by product and as it is exempt whether he is required to reverse credit on Packing material proportion to Exempt sale of churi on monthly basis.

if this packing material wholly used for makka pavva still he required to reverse credit on proportional basis.

kindly guide on the same

Reply

where input are used for both taxable as well as exempted goods,  the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies. The credit that is attributable to exempted supplies must be reversed Whereas if inputs are being used only for providing taxable supplies, no reversal shall be made Therefore, if your client is using inputs for making only taxable supplies, no reversal of ITC shall be made.