Answer

1. F

   Facts

   If you use common inputs for taxable and exempt supplies, part of the ITC must be reversed under Rules 42 and 43. The officer checks whether you did this.

2. P

   Provisions and law

   • Rules 42 and 43, CGST Rules 2017Reversal of common ITC for exempt supplies and non-business use
   • Instruction 02/2022-GST (22 March 2022)SOP for scrutiny: one ASMT-10 per GSTIN per year, specific and quantified discrepancies, DRC-03 payments to be considered, timelines for ASMT-12 or further action
3. A

   Analysis

   The SOP lists Rules 42 and 43 reversals as a parameter. Example: total turnover ₹1 crore, exempt ₹20 lakh, common ITC ₹2 lakh; about 20 percent, ₹40,000, should be reversed. Show your yearly working; if not done, pay with interest.

4. C

   Conclusion

   1. 1Work out exempt turnover as a share of total.
   2. 2Apply it to common ITC.
   3. 3Compare with any reversal you made.
   4. 4Pay any shortfall with interest.
   5. 5Attach the working.

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