Find
Yes. Sec 17(2) and Rule 42 require ITC used for both taxable and exempt supplies to be split. The share related to exempt supplies is reversed monthly by formula and trued up at year end.
GST
Common credit split when you also have exempt sales
Updated . Every paid answer is checked by a CA. Free AI answers are labelled until a CA verifies them.
Provisions
Sec 17(2), CGST Act 2017; Rule 42, CGST Rules 2017
Analysis
If your common credit is ₹1,00,000 and exempt turnover is 20 percent of total turnover, reverse ₹20,000. Credit used only for taxable sales stays fully available, and credit used only for exempt sales is fully reversed. Missing this is a frequent ground in scrutiny and audits.
Close
- Classify credit as taxable-only, exempt-only or common
- Compute the exempt share of common credit each month
- Reverse it in GSTR-3B
- Do the annual true-up and adjust the difference
Connect now
A Savvy replies in minutes.
Fixed price before you pay. Your Savvy is paid only after you accept the work.
General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.