Refund of unutilised input tax credit

[Yatin Bhopi]

Dear expert

We are procuring goods locally on the payment of SGST+CGST and supplying goods to SEZ without payment of taxes under LUT. Now we are not able to utilise ITC paid on purchses since there is no other taxable supply.

Please let me know whether is there any provision of claiming refund claim of unutilised ITC.

[DR.MARIAPPAN GOVINDARAJAN]

In my view, no refund is possible.

[Yatin Bhopi]

is there any way to overcome this situation.

[Rajagopalan Ranganathan]

Sir,

As per Section 16 (1) (b) of IGST Act, 2017 "supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit" is "zero rated supply."

According to Section 16 (3) of the same Act "a registered person making zero rated supply shall be eligible to claim refund under either of the following options, namely:––

(a) he may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit; or

(b) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied,

in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder.

[Yatin Bhopi]

Thanks a lot Sir

[Nash Industries I Pvt Ltd]

Supplies to SEZ is a physical export. Since all the supplies are only to SEZ, suggest to pay the IGST on the goods supplied to SEZ instead of LUT. Refund of the IGST paid is allowed and is easier relatively compared to the refund of unutilised ITC.

Regards

S.Ramaswamy

[Yatin Bhopi]

Dear Sir

Since CGST+SGST credit is accumulated, we can not able to utilise it to pay IGST.

In this situation as mentioned by Mr. Rajagopalan Ranganathan Sir only option available is to take refund of unutilised input tax credit.

[Nash Industries I Pvt Ltd]

CGST and SGST can be utilised for payment of IGST. The payment of IGST utilising the CGST and then SGST is allowed.

its payment of IGST for exports and hence refund of the IGST paid on clearances to SEZ is allowed.

It is always simpler to get the refund of outward IGST on exports when compared to refund of unutilised Input Credit.

IGST can be utilised for payment of IGST, CGST and SGST in that order/

Only Cross utilisation of CGST and SGST is not allowed.

Regards

S.Ramaswamy

AI Summary

Refund Possible for Unutilized ITC on SEZ Supplies Under Section 16 of IGST Act 2017; Consider Paying IGST for Ease A forum participant inquired about claiming a refund for unutilized input tax credit (ITC) under the Goods and Services Tax (GST) system. They supply goods to a Special Economic Zone (SEZ) without paying taxes under a Letter of Undertaking (LUT) and have accumulated ITC from local purchases. An expert initially stated that no refund is possible, but another participant clarified that under Section 16 of the IGST Act, 2017, a refund of unutilized ITC is available for zero-rated supplies to SEZs. It was suggested to pay IGST on SEZ supplies to facilitate easier refunds.