Refund of ITC on purchase of goods other than exporters

[Jasbir Uppal]

Dear professionals,

"Wishing you all a very Happy and prosperous new Year"

I am a manufacturer and the finished goods are coming under the rate of tax @5% but the goods manufactured are charged at the rate lower than the tax paid on the input of goods and services. Now my question is how to claim the refund of the excess ITC showing in the electronic credit ledger..

Please give your valuable views.

Thanks & Regards

J.S.Uppal

Tax Consultant

[Mr Rao]

Dear querist

You can claim such amount under Refund on account of inverted tax structure and you have to file the claim with your jurisdictional office by following the prescribed procedure.

[Mahadev R]

Yes. Refund of inverted duty structure possible under Section 54.

[SHARAD ANADA]

Refer sec 54(3)(ii)

(ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council:

So you eligible for refund of ITC accumulated of goods only and not of ITC accumulated of input services and capital goods.

Rule 89(5) has been amended as on 13.06.2018 with retrospective effect. As per amended rule ITC for refund covers only ITC on goods.

AI Summary

Inverted tax structure refund available for accumulated input tax credit on goods, limited excluding input services and capital goods.
Refund claims for accumulation of input tax credit due to an inverted tax structure are available where input tax rates exceed output tax rates on taxable supplies; such refunds are limited to ITC on goods and exclude ITC on input services and capital goods. A retrospective amendment to the refund rule confirms that refund coverage applies only to ITC on goods. Claims must be filed through the prescribed procedure with the jurisdictional office using the electronic credit ledger.