Suggestions on GST Acts (July 2017) by Institute of Chartered Accountants of India
19. Treatment of Credit for assessees making fully exempt supplies
Section 17(2) of the CGST Act, 2017 provides that where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under CGST Act or under IGST Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies.
Issue
This section does not provide for the cases where the assessee is engaged in fully exempted supplies. There is no specific provision for restriction of credit in cases of fully exempted supplies. This may cause litigations.
Suggestion
It is suggested that there be made specific provisions for treatment of credit in case assessee is making fully exempted supplies.
Read ICAI Suggestions on GST Act to Govt : July 2017
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