Refund of ITC on capital goods in case of export of services under cover of LUT

[Archna Gupta]

Dear experts

One company is in business of export of services (no domestic supplies). initially it exported services on payment of IGST. It utilised ITC at the time of payment of IGST on export of services. Later it applied for LUT and after that all supplies were done under LUT without payment of IGST. Since then it has huge balance of ITC in its credit ledger. ITC includes ITC on Inputs, Input services and capital goods (approx 40 lacs). As per Rule 89, the company can claim refund of ITC on Inputs and input services only and the accumulated balance of ITC on capital goods will remain as it is. Please suggest what action can be suggested to company to save it from loss of ITC on capital goods.

Please reply.

Regards

AI Summary

Refund of Input Tax Credit on capital goods restricted for exports under LUT, limiting ITC to inputs and input services.
The question is whether accumulated ITC that includes credit on capital goods can be refunded where exports of services are made under bond/LUT after earlier exports were made on payment of IGST. Contributors note that refund mechanisms typically allow recovery of unutilised ITC on inputs and input services but not on capital goods when supplies are under LUT; alternatives discussed include filing refund applications when portal functionality permits, paying IGST and then claiming refund, or seeking policy relief from the GST Council.