Whether ITC on Capital Goods which is commonly used for effecting Taxable supply as well as NIL rated supply can be taken fully or proportionate reversal with respect to NIL rated supply is required to be done or it can be availed and utilized fully?
Ans. Input Tax Credit (“ITC”) on Capital Goods can be availed fully at the time of purchase. However, when such goods are used in manufacture / supply of exempt goods / services, proportionate reversal of ITC is required to be done on monthly basis by the taxpayer as per the formulae given under section 17 of the CGST Act, 2017 read with rule 43 of CGST Rules, 2017.
