My product contains raw materials which attracts 5%, and 18% GST. My Final product GST % is 5 only.
Sized cotton/viscose warp - 18%
Cotton weft yarn - 5%
Final Product Saree with 85% cotton and other materiasl (HSN code 5208) is taxed at 5%.
So finally ended up n making loss, any other way to overcome this problem?
Understanding GST Refunds: Claiming ITC on Inverse Tax Structure Under Section 54(3) and Rule 89 of CGST Rules 2017. A user inquired about dealing with GST on a product composed of raw materials taxed at 5% and 18%, while the final product is taxed at 5%, leading to a financial loss. Responses suggested consulting a tax expert and applying for a refund of accumulated input tax credit (ITC) due to the inverse tax structure under Section 54(3) of the CGST Act. The refund process involves using a formula outlined in Rule 89 of the CGST Rules, 2017, which calculates the maximum refund based on turnover and net ITC. (AI Summary)
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