Question: If Investment in bonds is not for the purpose of business, then ITC reversal is not required on its interest income u/s 17(2)?
Answer: Any investment which forms part of the books of accounts shall form part of business. Interest earned on such investment is excluded for the purpose of reversal as Explanation 1 to rule 43 provides that the value of services by way of accepting deposits, extending loans or advances in so far as the consideration is represented by way of interest or discount, except in case of a banking company or a financial institution including a non-banking financial company, engaged in supplying services by way of accepting deposits, extending loans or advances, shall be excluded from the value of exempt supply for the purpose of computing reversal of common credits.
 is not required on interest earned from non-business investment in bonds under GST. Legal basis and case laws explained.){kind=link}