Section 42(1) in The Central Goods and Services Tax Rules, 2017
(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)the 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 the purposes other than business, be denoted as 'T1';(c)the amount of input tax, out of 'T', attributable to inputs and input services intended to be used exclusively for effecting exempt supplies, be denoted as 'T2';(d)the amount of input tax, out of 'T', in respect of inputs and input services on which credit is not available under sub-section (5) of section 17, be denoted as 'T3';(e)the amount of input tax credit credited to the electronic credit ledger of registered person, be denoted as 'C1' and calculated as-C1 = T - (T1 + T2 + T3);(f)the amount of input tax credit attributable to inputs and input services intended to be used exclusively for effecting supplies other than exempted but including zero rated supplies, be denoted as 'T4';[Explanation. - For the purpose of this clause, it is hereby clarified that in case of supply of services covered by clause (b) of paragraph 5 of Schedule II of the said Act, value of T4 shall be zero during the construction phase because inputs and input services will be commonly used for construction of apartments booked on or before the date of issuance of completion certificate or first occupation of the project, whichever is earlier, and those which are not booked by the said date.] [Inserted by Notification No. G.S.R. 249(E), dated 29.3.2019 (w.e.f. 19.6.2017).](g)'T1', 'T2', 'T3' and 'T4' shall be determined and declared by the registered person at the invoice level in Form GSTR-2 [and at summary level in Form GSTR-3B] [Inserted by Notification No. G.S.R. 249(E), dated 29.3.2019 (w.e.f. 19.6.2017).];(h)input tax credit left after attribution of input tax credit under clause [(h)] [Substituted '(g)' by Notification No. G.S.R. 249(E), dated 29.3.2019 (w.e.f. 19.6.2017).] shall be called common credit, be denoted as 'C2' and calculated 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) × C2where,'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 in case of supply of services covered by clause (b) of paragraph 5 of Schedule II of the Act, the value of 'E/F' for a tax period shall be calculated for each project separately, taking value of E and F as under: -E= aggregate carpet area of the apartments, construction of which is exempt from tax plus aggregate carpet area of the apartments, construction of which is not exempt from tax, but are identified by the promoter to be sold after issue of completion certificate or first occupation, whichever is earlier;F= aggregate carpet area of the apartments in the project;Explanation 1. - In the tax period in which the issuance of completion certificate or first occupation of the project takes place, value of E shall also include aggregate carpet area of the apartments, which have not been booked till the date of issuance of completion certificate or first occupation of the project, whichever is earlier;Explanation 2. - Carpet area of apartments, tax on construction of which is paid or payable at the rates specified for items (i), (ia), (ib), (ic) or (id), against serial number 3 of the Table in the notification No. 11/2017-Central Tax (Rate), published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) dated 28th June, 2017 vide GSR number 690(E) dated 28th June, 2017, as amended, shall be taken into account for calculation of value of 'E' in view of Explanation (iv) in paragraph 4 of the notification No. 11/2017-Central Tax (Rate), published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) dated 28th June, 2017 vide GSR number 690(E) dated 28th June, 2017, as amended.] [Inserted by Notification No. G.S.R. 249(E), dated 29.3.2019 (w.e.f. 19.6.2017).][Provided further] [Substituted 'Provided' by Notification No. G.S.R. 249(E), dated 29.3.2019 (w.e.f. 19.6.2017).] 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 be calculated by taking values of 'E' and 'F' of the last tax period for which the details of such turnover are available, previous to the month during which the said value of 'E/F' is to be calculated;Explanation. - For the purposes of this clause, it is hereby clarified that the aggregate value of exempt supplies and the total turnover shall exclude the amount of any duty or tax levied under entry 84 [and entry 92A] [Inserted by Notification No. G.S.R. 63(E), dated 29.1.2019 (w.e.f. 19.6.2017).] of List I of the Seventh Schedule to the Constitution and entry 51 and 54 of List II of the said Schedule;(j)the amount of credit attributable to non-business purposes if common inputs and input services are used partly for business and partly for non-business purposes, be denoted as 'D2', and shall be equal to five percent of C2; and(k)the remainder of the common credit shall be the eligible input tax credit attributed to the purposes of business and for effecting supplies other than exempted supplies but including zero rated supplies and shall be denoted as 'C3', where,-C3 = C2 - (D1+D2);(l)[ the amount 'C3', 'D1' and 'D2' shall be computed separately for input tax credit of central tax, State tax, Union territory tax and integrated tax and declared in Form GSTR-3B or through Form GST DRC-03;] [Substituted by Notification No. G.S.R. 249(E), dated 29.3.2019 (w.e.f. 19.6.2017).](m)the amount equal to aggregate of 'D1' and 'D2' shall be [reversed by the registered person in Form GSTR-3B or through Form GST DRC-03] [Substituted 'added to the output tax liability of the registered person' by Notification No. G.S.R. 249(E), dated 29.3.2019 (w.e.f. 19.6.2017).]:Provided that where the amount of input tax relating to inputs or input services used partly for the purposes other than business and partly for effecting exempt supplies has been identified and segregated at the 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'.
