refund of unutilized ITC under GST after export under LUT

[BalKrishan Rakheja]

After exporting the goods under LUT and claimed refund for untilized ITC. As per formula refund amount comes to Rs. 50 Lacs but credit ledger balance at the end of the tax period (month in which the export took place) is ₹ 10 lacs only. Which amount I am eligible for refund of ITC, however as on today the credit ledger balance is ₹ 80 Lacs

[YAGAY and SUN]

As per Section 54(3) of the CGST Act, 2017, a registered person may claim refund of unutilised input tax credit at the end of any tax period. A tax period is the period for which return is required to be furnished.

Refund of unutilised input tax credit is allowed only in following two cases:

a) Zero rated supplies made without payment of tax

b) Inverted duty structure

[Harshal Fifadra]

Lower of the three. i.e. 10 lacs.

This is as per the refund application

[Alkesh Jani]

Sir, in this regards, please refer Circular No. 37/11/2018-GST dated 15/03/2018. The relevant paras No. 11.1 and 11.2 is reproduced below

11.1 In many scenarios, exports may not have been made in that period in which the inputs or input services were received and input tax credit has been availed. Similarly, there may be cases where exports may have been made in a period but no input tax credit has been availed Page 6 of 8 in the said period. The above referred rule, taking into account such scenarios, defines relevant period in the context of the refund claim and does not link it to a tax period.

11.2 In this regard, it is hereby clarified that the exporter, at his option, may file refund claim for one calendar month / quarter or by clubbing successive calendar months / quarters. The calendar month(s) / quarter(s) for which refund claim has been filed, however, cannot spread across different financial years.

However, to be honest, I am not be to understand para 11.2. I request our experts to please clarify the issue that how to club and how to file the refund for quarters, as online it is for the month only.

[BalKrishan Rakheja]

Thanks Harshal ji. I also agree with your views.

[BalKrishan Rakheja]

Thanks Alkesh Jani ji for your valuable information. But my querry is still unanswered regarding for which amount I am eligible for refund. Please give your valuable advise.

[Alkesh Jani]

Sir, you are requested to furnish the figures as per formula, than only proper reply can be given by our experts. However, if we think logically, the refund may be equal to or less than the input tax of value of exported goods. For example, if goods exported valued for ₹ 100/- than refund shall be ₹ 18/- or less.

[KASTURI SETHI]

Dear Querist,

Rs.10 lacs is correct answer. How it is correct is explained as under :-

There is a restriction (period-wise) for the purpose of accumulation of refund claim due out of of accumulated/unutilized credit at the end of respective month/quarter and also restriction on crossing over next financial year. As per Point No.11.2 the position is as under:-

(1). If you file monthly return, the amount of refund to be claimed should not exceed the balance of credit lying at the end of relevant month i.e. in which refund being claimed against the goods.exported in the respective month.

(2). If you file quarterly return, the amount of refund claimed should not exceed the balance of credit lying at the end of quarter i.e. in which refund being claimed against the goods.exported in the respective quarter.

(3) The refund due against the goods exported should not cross the relevant financial year i.e. clubbing of month or quarter for the purpose of claiming refund against export is allowed for the same financial year and not in next financial year(s) and onward. You should claim refund against export within one year. Cycle of one year has to be monitored to claim the whole due amount.

[BalKrishan Rakheja]

Thanks Sethi ji. I am fully agreed with your views.

[rohit patodi]

what would be my adjusted turnover and net ITC in case of refund of input tax credit availed on inputs in case of exporters. For eg., an exporter has exported goods on LUT worth rs 2500000 in July period and in the same period he has done taxable sale within state worth rs 500000 and tax is ₹ 12500 cgst and sgst. So Total sale would be 3000000 rs. He has total input on purchases amounting to ₹ 150000 cgst and sgst. Thus input left at the end of the tax period at the end of the month is 150000-12500 i.e 137500.

In this case, how can I calculate adjusted turnover and net ITC?

6 Dated: 12-4-2018 By:- Alkesh Jani

Sir, you are requested to furnish the figures as per formula, than only proper reply can be given by our experts. However, if we think logically, the refund may be equal to or less than the input tax of value of exported goods. For example, if goods exported valued for ₹ 100/- than refund shall be ₹ 18/- or less.

Sir, i have a similar issue in a case of mine. GST on export value is less than the ITC and that's why deficiency memo issued to the taxpayer. But in my opinion, nowhere it is written in the GST Act, 2017 and rules thereof.

Kindly suggest asap.

[Alkesh Jani]

Sir, Refund amount will be as per formula given at Rule 89(4) of CGST Rules, 2017. If the value of exported goods is less than Refund amount will also be less. However, details furnished in statement along with refund claim is also to be considered before arriving to refund amount.

Thanks

AI Summary

Unutilised input tax credit refund: statutory formula subject to credit ledger ceiling and relevant period limits under GST.
Refund of Unutilised Input Tax Credit on exports under bond or LUT is available for zero rated supplies and inverted duty structure; the refundable amount is calculated by the statutory refund formula but is subject to a ceiling equal to the input tax credit balance shown in the credit ledger at the end of the elected relevant tax period, and period clubbing is permitted only within the same financial year with reconciliation via the refund statement.