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Question ID : 35834


1. RM which we are purchasing is on GST 18% and our final product is tax free (our being feed supplement for animals). This has increased our purchase prise as earlier we were procuring RM against CST 2%. Can we claim input as refund as done with cloth manufacturers. 2. Or can we adjust GST input credit of RM mentioned in point no. 1 in our other GST liabilities arising out of sale of taxable products.

Posted by harjinder on Oct 06, 2018

Filed Under GST

Answer ID : 74968

Since the finished goods are exempted, you are not entitle for ITC nor you are eligible for Tax refund of inputs. Since ITC cannot be availed, same cannot be available for utilization in respect of GST paid on other dutiable goods.

Posted by CA. BHANSALI ARVIND on Oct 07, 2018
Answer ID : 74975

No, input tax credit is not available if output is tax free (as stated). 17(2) denies credit when output is wholly exempt. And as a result, GST paid becomes cost.

Posted by CA. JATIN CHRISTOPHER A on Oct 10, 2018