TaxTMI 
TaxTMI 
Sir
department has paid refund for inverted duty structure for july 17, which includes refund on capital goods. How to rectify in books .Pls guide the procedure.
refund of capital goods under inverted duty
13 Aug 2018 
2 Replies 
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Inverted duty refund: treat capital goods ITC cautiously and reverse corresponding ITC or capitalised cost entries.
Refunds under inverted duty should relate to raw materials; refunding ITC on capital goods is risky. If ITC was capitalised, reverse the capitalised cost and recognise refund income to the extent of depreciation claimed on that ITC. If ITC was availed, reverse the Input Tax Credit to the extent of the refund received (per the electronic credit ledger on the refund application date) and ensure reconciliation if the reversal entry was not recorded. (AI Summary)
Refunds under inverted duty should relate to raw materials; refunding ITC on capital goods is risky. If ITC was capitalised, reverse the capitalised cost and recognise refund income to the extent of depreciation claimed on that ITC. If ITC was availed, reverse the Input Tax Credit to the extent of the refund received (per the electronic credit ledger on the refund application date) and ensure reconciliation if the reversal entry was not recorded. (AI Summary)