Under GST, if a registered person makes both taxable and exempt supplies, the input tax credit (ITC) on common inputs must be reversed. Which rule prescribes the methodology for this reversal? MCQ with Answer and Explanation
Under GST, if a registered person makes both taxable and exempt supplies, the input tax credit (ITC) on common inputs must be reversed. Which rule prescribes the methodology for this reversal?
A. Rule 54 and 55
B. Rule 36 and 37
C. Rule 42 and 43
D. Rule 89 and 90
Answer: Option C
Solution (By JKSSB Mock Tests)
Rule 42 and 43 of the CGST Rules prescribe the methodology for determining and reversing ITC attributable to exempt and non-business supplies.
A company has an operating cycle of 90 days. Its average daily cash outflow is ₹2,00,000. It maintains a minimum cash balance of 10% of its cash outflow during the operating cycle. What is the minimum cash balance it should maintain?
Explanation:
Total cash outflow during the operating cycle = 90 days * ₹2,00,000 = ₹1,80,00,000. Minimum cash balance = 10% of ₹1,80,00,000 = ₹18,00,000.
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