We apply the De Minimis Rule when the exempt inputs are less than 5% of exempt supplies.
De Minimis Rule for Claiming GST Credit for Exempt Supplies: When you have to satisfy the De Minimis Rule, the exempt supplies value needs to be lesser than or it has to be equivalent to a) an average of about USD 40,000 on a monthly basis and b) five per-cent of the full value of all exempt and taxable supplies which had been made during that period.
When Could You Satisfy De Minimis Rule?
So the question areas to what would happen when we satisfy the De Minimis Rule. One might make claims for all the input tax incurred upon when we satisfy the De Minimis Rule. This should exclude the disallowed input tax, which comes under regulations twenty-six and twenty-seven of the GST (General) Regulations.
Regarding the input type of tax claims, they are being permitted only towards the end of each period of accounting that has been prescribed. However, one needs to make long-time adjustments by doing similar tests regarding the input type of tax claims. The adjustments one has done in the long run.
When Could You Not Satisfy De Minimis Rule?
In case we find the De Minimis rule not satisfactory, then one could not directly make claims for input type of taxation. They attribute it directly towards creating exempt supplies.
Regarding input tax, we do not consider as attribute directly to exempt or taxable supplies. We can compute the amount to claim using this formula. Total allowable residual input tax would be equivalent to residual input tax multiplied by the value of the supplies taxable, divided by the value pertaining to the total supplies.