Rule 7 – Final Rules (Draft) – Input Tax Credit – GST – Input Tax Credit – Final Draft Rules 18-5-2017 – Rule 7 – 7. Manner of determination of input tax credit in respect of inputs or input services and reversal thereof (1) The input tax credit in respect of inputs or input services, which attract the provisions of sub-section (1) or sub-section (2) of section 17, being partly used for the purposes of business and partly for other purposes, or partly used for effecting taxable supplies including zero rated supplies and partly for effecting exempt supplies, shall be attributed to the purposes of business or for effecting taxable supplies in the following manner, namely,- (a) total input tax involved on inputs and input services in a tax period, be denoted as T ; (b) the amount of input tax, out of T , attributable to inputs and input services intended to be used exclusively for purposes other than business, be denoted as T1 ; (c) the amount
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culated as: C2 = C1- T4; (i) the amount of input tax credit attributable towards exempt supplies, be denoted as D1 and calculated as: D1= (E÷F) × C2 where, E is the aggregate value of exempt supplies during the tax period, and F is the total turnover in the State of the registered person during the tax period: Provided that where the registered person does not have any turnover during the said tax period or the aforesaid information is not available, the value of E/F shall calculated by taking values of E and F of the last tax period for which details of such turnover are available, previous to the month during which the said value of E/F is to calculated; Explanation: For the purposes of this clause, the aggregate value of exempt supplies and total turnover shall exclude the amount of any duty or tax levied under entry 84 of List I of the Seventh Schedule to the Constitution and entry 51 and 54 o
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has been identified and segregated at invoice level by the registered person, the same shall be included in T1 and T2 respectively, and the remaining amount of credit on such inputs or input services shall be included in T4 . (2) The input tax credit determined under sub-rule (1) shall be calculated finally for the financial year before the due date for furnishing of the return for the month of September following the end of the financial year to which such credit relates, in the manner prescribed in the said sub-rule and, (a) where the aggregate of the amounts calculated finally in respect of D1 and D2 exceeds the aggregate of the amounts determined under sub-rule (1) in respect of D1 and D2 , such excess shall be added to the output tax liability of the registered person in the month not later than the month of September following the end of the financial year to which such credit relates and the said person shall be liable to pay interest on the said excess am
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