Is RCM applicable on exempted goods?

Reverse charge applies only when there is a charge on supply. If supply is exempted, nil rated or non-taxable, RCM does not apply in such a case. Recipient of goods or services discharges GST under RCM as if he is the person liable for paying the tax on supply procured by him.

Can input be claimed on exempt supplies?

ITC can be availed only on goods and services for business purposes. If they are used for non-business (personal) purposes, or for making exempt supplies ITC cannot be claimed .

How do you reverse an exempted ITC supply?

Taxpayers must reverse the amount of ITC directly attributable to a particular supply that is non-taxable/used for personal consumption, only when wrongly availed….Rule 42 : Reversal of ITC on inputs/input services.

Can we claim ITC on exempted goods?

ITC cannot be claimed for inputs used in such exempted goods as it will lead to negative taxation. So, ITC on inputs for exempted goods will also have to be removed. The credit that is attributable to personal supplies & exempted supplies must be reversed in GSTR-2.

Who can claim input credit of all inward supplies?

If you are a manufacturer, supplier, agent, e-commerce operator, aggregator or any of the persons mentioned , registered under GST, you are eligible to claim INPUT CREDIT for tax paid by you on your PURCHASES. For example, If you have purchased goods worth Rs 100.00 and paid Rs 5.00 as GST on it @ of 5\% .

What are the exempt supplies under GST?

It is the supply of goods and services that does not attract GST and allows no claim on ITC. Example: Bread, fresh fruits, fresh milk and curd etc. Exempt supply is defined in section 2(47) of GST Act.

Is RCM applicable on freight outward?

Applicability of reverse charge mechanism on GTA services was notified vide notification no. ITC of tax paid under RCM towards GTA services availed both on account of (inward supply of goods from the supplier or outward supply of goods to the customer) shall be allowed to such person.