Parthiv Chemicals Pvt. Ltd. is a manufacturing company registered under GST in the State of Maharashtra. It manufactures two taxable products "Sun" and "Moon", and one exempt product "Jupiter". On 1st October, 2018, prod

Computation of amount of input tax credit (ITC) credited to Electronic Credit Ledger for the month of October' 2018 S. No. Particulars Amount of ITC to be credited (₹) (a) Machinery "L" [Note 1] 21,600 (b) Machinery "M" [Note 2] 36,000 (c) Raw Material used for manufacturing "Sun" [Note 3] 39,600 (d) Raw Material used for manufacturing "Moon" [Note 3] Nil (e) Raw Material used for manufacturing "Jupiter" [Note 3] 18,000 Total ITC credited to Electronic Credit Ledger 1,15,200 Notes: ITC in respect of capital goods used or intended to be used exclusively for effecting supplies other than exempted supplies but including zero rated supplies shall be credited to the electronic credit ledger [Rule 43(1)(b) of the CGST Rules, 2017]. Since 'Jupiter' became taxable from 1st Oct 2018, Machinery 'L' used for 'Sun' (taxable) and 'Jupiter' (taxable) is eligible for full ITC. (₹1,20,000 * 18% = ₹21,600). Where any capital goods earlier used exclusively for effecting exempt supplies is subsequently also used for effecting taxable supplies, the value of capital goods being machinery "M" shall be arrived at by reducing the ITC at the rate of 5% for every quarter or part thereof and the amount so arrived at shall be credited to the electronic credit ledger [Proviso to Rule 43(1)(c) of the CGST Rules, 2017]. Thus, ITC on "M" shall be computed as under: Original ITC on Machinery 'M' = ₹5,00,000 * 18% = ₹90,000. Used for exempt supply ('Jupiter') from 1st Oct 2015 to 30th Sep 2018 = 3 years = 12 quarters. Reduction in ITC = ₹90,000 * 5% * 12 quarters = ₹54,000. ITC available = ₹90,000 - ₹54,000 = ₹36,000. ITC in respect of inputs used for effecting taxable supplies will be credited in electronic credit ledger. ITC in respect of inputs used for effecting exempt supplies will not be credited in electronic credit ledger [Rule 42 of CGST Rules, 2017]. Raw material for 'Sun' (taxable) = ₹2,20,000 * 18% = ₹39,600. Raw material for 'Moon' (exempt from 1st Oct 2018) = Nil ITC. Raw material for 'Jupiter' (taxable from 1st Oct 2018) = ₹1,00,000 * 18% = ₹18,000.