The credit attributable to exempt supplies in such cases are determined as under in terms of Rule 42 of the CGST Rules, 2017:
D1 = (E/F) x C2
Where
D1 = Credit attributable to exempt supplies
E = aggregate value of exempt supplies (all supplies other than taxable and zero rated supplies)
F = total turnover of the person in the tax period
C2 = Common Credit i.e. Total input tax in a period reduced by:
Tax attributable exclusively for non-business purpose
Tax attributable exclusively for exempt supplies
Ineligible credits as per Section 17(5)
Tax attributable exclusively for taxable supplies (including zero rated
supplies)
(ICAI FAQ PUBLICATIONS 06-09-2017 INPUT TAX CREDIT: FAQ NO. 56)