QUESTION
We have supply pure service to municipal corporation as machinery rent income
(we received rent from municipal corporation as machienry rent income per month
rs. 700000/-rent income ) my question is RENT INCOME IS EXEMPT INCOME ? MAY BE
GST NOT applicable as per notification no, 12/2017 sr.no. 3 Chapter 99 Pure
Sevices . IF RENT INCMOE RS. 700000/- IS EXEMPTED SO IS THERE MY MACHINERY VALUE
IS 7500000/- LAKHS SO are we liable for reverse PURCHASE ITC ? ifitc are
reversed so what is formula for reversable it c itc is reversal eighter monthly
basis or one time full purchase cost itc will be reversible ? my BIG CONFUSION
(IF FULL ITC REVERSE) in my view if our machinery is after 3 month not proper
working and contract is cancle from municiplity that time we was received only
rs. 700000/- x 3month rent received = rs. 2100000/- and full itc was reversed in
gst3b and we will sale this machinery to another person so wath We Do ? Full ITC
Reverse loss we cant bare it my big Confusion (IF PARTIALY ITC
REVERSE IN EVERY MONTH WHILE RENT INCOME RECEIVED FROM MUNICIPALITY) ANY FORMULA
FOR PARTIALLY ITC REVERSE THANKS TEJAS PANCHAL +91 9925387740. IF ANY CONFUSION
FEEL FREE CALL TO US
ANSWER
Facts of the Case:
Taxability of rental income on machinery supplied to Municipal
Corporation. If rental income is exempt how to reverse the ITC taken on purchase
of machinery.
Law Applicable:
Notification no. 12/2017 Central tax (rate)
|
3 |
Chapter 99 |
Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental authority or a Government Entity by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. |
Nil |
Nil |
Interpretation: Supply of pure services in the form of renting of
machinery to Municipal corporation is exempt vide S.no. 3 of Notification No.
12/2017 Central tax (rate).
You are required to reverse ITC proportionately in respect of Expect income only i.e. for 3 months only.
So far as sale of Machinery is concerned, you are required to pay tax on transaction value at the time of sale irrespective of reversals done in earlier period.
The
procedure to reverse the proportionate ITC is prescribed in Rule 43 of CGST
Rules. the same is enclosed for your reference.
Conclusion: ITC
is required to be reversed on Proportionate basis for 3 months as per the method
prescribed in Rule 43.(Reply dt.21.09.2020)