EXAMPLE-133
Ram Private
Limited manufacturer of product 'A' taxable under GST and also
manufacture product 'B' which is exempt under GST. The said company during the month of
September manufactured 1000 unit of product 'A' value Rs 250 p.unit and 2000 unit
of product "B" value of 200 p.unit. Input "Y" is used for both
products 'A' and 'B'. The company purchased 2000 unit of input for
rupees 2 lakh, on which GST paid is rupees 36000 @ of 18%. All inputs were used
for product 'A' and product 'B'.
(i)
Determine the input tax available in electronic credit ledger.
If 800 unit of input used exclusively for taxable product and balance input is
used exclusively for exempt product.
(ii)
If Rs 36000 input
tax paid is a common credit but it is not known how much inputs are used in
exempted supplies. Determine
the entitlement of ITC in E- credit ledger when value of turn over .
Answer
(i) In our above example 1200 units of input have been exclusively
used for exempt product. Therefore, according to section 17(2), input tax credit relating to these units
will not be
eligible which works out to Rs. 36000*1200/2000 = Rs.21600
Credit
relating to input used for taxable product shall be available in E-credit ledger
account which will be 36000*800/2000 = Rs. 14400
(ii)
In this situation here is the common credit of Rs.36000 in the
month September and in accordance to rule 42(1)(Manner of determination of input
tax credit in respect of inputs or input services and reversal thereof) of
Chapter - V of CGST Rules, 2017- input
tax credit attributable towards exempt supplies and taxable supplies will be in the
ratio of turnover of exempt supplies and turnover of taxable supplies during the
said tax period. In case the registered person does not have any turnover during
the said tax period or the aforesaid information is not available, the value of
E/F shall be calculated by taking values of E and F of the last
tax period for details of which are available pertaining to the month previous to the
month during which the said value of E/F is to calculated.
Input tax credit attributable towards exempt supplies, be
denoted as D1=
D1=
(EśF) Ś common credit
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:
D1 = 400000/650000*36000 = Rs.
22154
Amount equal
to D1 shall be added to the output tax liability of the
Ram Pvt Ltd.
Input tax
credit attributable towards taxable supplies =
36000-22154 = Rs.13846