timing of sales relative to GST rate changes can directly impact your income tax liability, due to ITC reversals turning into deductible business expenses.
let's walk through a clear, practical comparison of two businesses to understand the impact on taxable profit under the Income Tax Act when: Both had claimed ITC on goods purchased when they were taxable. Later, the output supply becomes exempt (due to a GST rate change or notification). One sells all stock before the exemption. The other holds unsold stock when the goods become exempt and must reverse ITC. 📊 Scenario Overview Particular Business A Business B Situation Sold all taxable goods before exemption Still holds unsold goods when exemption hits Action Needed ✅ No reversal of ITC ❌ Must reverse ITC on unsold goods Impact Full ITC retained and utilized ITC reversed — becomes cost Taxable Profit ...
