CA Intermediate · Taxation · Input Tax Credit
Meera Enterprises supplies taxable goods and also exempt goods. In a month, its common input tax credit (not specifically attributable) is Rs 60,000, and it has no blocked credits. Turnover: taxable Rs 8,00,000 and exempt Rs 2,00,000 (aggregate turnover Rs 10,00,000). Ignoring other adjustments, the ITC eligible on the common credit is:
Eligible ITC is Rs 48,000. Common credit must be apportioned between taxable and exempt supplies by turnover. Exempt turnover is 20% of aggregate turnover, so Rs 12,000 is reversed from Rs 60,000. Rs 12,000 is the reversal, not the credit allowed.
- ARs 12,000
- BRs 48,000Correct
- CRs 60,000
- DRs 8,000
Explanation
Exempt supplies ratio = 2,00,000/10,00,000 = 20%, so reversal is 20% of 60,000 = Rs 12,000. Eligible = 60,000 - 12,000 = Rs 48,000. Option A is the amount to be reversed, not the eligible credit.
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