ITC Rules (Rule 36-45) – Manner of Reversal
I.Reversal of credit where inputs or input services are used partly for business purposes or partly for effecting exempt supplies –
- Total input tax in a tax period to be denoted as ‘T’
- Amount of input tax used exclusively for the purposes other than business ‘T1’
- Amount of input tax used exclusively for effecting exempt supplies ‘T2’
- Amount of blocked credit as per Section 17 (5) ‘T3’
- Amount of input tax to be credited to electronic credit ledger ‘C1 = T-(T1+T2+T3)’
- Amount of input tax used exclusively for effecting taxable and zero rated supplies ‘T4’
- T1, T2, T3, T4 to be determined at invoice level in GSTR-2
- Common Credit “C2 = C1-T4”
- Credit attributable towards exempt supplies “D1 = C2*(E/F)
where
- ‘E’ is the aggregate value of exempt supplies, that is, all supplies other than taxable and zero rated supplies, during the tax period, and
- ‘F’ is the total turnover of the registered person during the tax period:
Credit attributable towards non business purpose “D2 = C2*5%