Page 22 - Chap7 ITC

Working Note: Computation of ITC (out of common credit) attributable to exempt supplies
Particulars Amount (₹)
Input tax on raw materials [Note 1] 40,000
Input tax on catering for housewarming ceremony [Note 2] Nil
Input tax on inputs contained in exempt supplies [Note 3] Nil
Input tax on cosmetic and plastic surgery of CEO of company [Note 4] Nil

Total ITC credited to the Electronic Credit Ledger in terms of rule 42 in the month of June 40,000
Common credit [Note 5] 40,000
ITC attributable towards exempt supplies [Note 6] 1,290
Notes:
1) ITC on raw materials is available if used for business [Sec 16(1)]

2) ITC on outdoor catering & cosmetic surgery is blocked unless used for taxable supply [Sec 17(5), Rule 42]
3)ITC on inputs for exempt supplies is not available [Rule 42]
4) ITC on cosmetic & plastic surgery is blocked u/s 17(5) unless used for similar taxable supplies.
5) Entire ₹ 40,000 is common credit as no exclusive taxable inputs exist. [Rule 42]
6) ITC to be reversed = Common Credit x (Exempt T/o/ Total T/o) i.e [₹ 40,000*₹ 2,00,000/₹ 62,00,000] = ₹
1,290
7) It is assumed that total turnover given in question excludes exempt supply.

Q.21 Vansh Shoppe is a retail supplier of both taxable and exempted goods, registered under GST in the
State of Rajasthan. Vansh Shoppe has furnished the following details for a month:

Sr. No. Particulars Amount paid
CGST (₹)
Details of sales:
1. Supply of taxable goods 50,00,000
Supply of goods not leviable to GST 10,00,000
Details of goods purchased for being sold in the shop:
2.
Taxable goods 45,00,000

Goods not leviable to GST 4,00,000
Details of expenses:
3.
Monthly rent payable for the shop 3,50,000
Telephone expenses paid
( 30,000 for land line phone installed at the shop and 20,000 towards mobile phone bills of the ₹ ₹ 50,000
employees – Mobile phones are given to employees for official use)
Audit fees paid to a Chartered Accountant
(₹ 35,000 for filing of income tax return & the statutory audit of preceding financial year and 60,000
₹ 25,000 for filing of GST return)
Premium paid on health insurance policies taken for specified employees of the shop as per 10,000
company policy.

Freight paid to goods transport agency (GTA) [service taxable @ 5%] for inward transportation 50,000
of goods not leviable to GST
Freight paid to goods transport agency (GTA) )[service taxable @ 5%] for inward transportation
1,50,000
of taxable goods
Goods given as free samples (Not included in Taxable goods value of 45,00,000) 5,000

All the above amounts are exclusive of all kind of taxes, wherever applicable. All the inward and outward
supplies made by Vansh Shoppe are from/to registered suppliers within Rajasthan.

Assume, wherever applicable, for purpose of reverse charge payable by Vansh Shoppe, the CGST, SGST and
IGST rates as 2.5%, 2.5% and 5% respectively. CGST, SGST and IGST rates to be 6%, 6% and 12%

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