ITC Reversal — Rule 42

Apportion common input tax credit between taxable and exempt supplies and compute the reversal attributable to exempt supplies and non-business use.

⇆

Inputs

Common credit C2 (after removing exclusive credits) (₹)

Exempt turnover E (₹)

Total turnover F (₹)

C2 = total ITC − (non-business T1 + exempt T2 + blocked T3 + exclusively-taxable T4).

Total ITC to reverse (D1 + D2)

₹0

≡

Working

Indicative. D1 = (E ÷ F) × C2 (credit attributable to exempt supplies). D2 = 5% × C2 (deemed non-business use). Eligible common credit C3 = C2 − D1 − D2. Reversal is done monthly and finalised annually; Rule 43 applies similarly to capital goods over 60 months. Confirm classifications.