Export of Service

[Kaustubh Karandikar]

XYZ is an exporter of service. 1) Can he claim ITC on purchase of capital asset viz. Computers? 2) if yes, can he claim refund of such accumulated ITC claim since having continuous export of service?

[Ganeshan Kalyani]

Sec 16. (1) of IGST Act , “zero rated supply” means any of the following supplies of goods or services or both, namely:––

(a) export of goods or services or both; or

(b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.

(2) Subject to the provisions of sub-section (5) of section 17 of the Central Goods and Services Tax Act, credit of input tax may be availed for making zero-rated supplies, notwithstanding that such supply may be an exempt supply.

(3) 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.

[Kaustubh Karandikar]

In my view, an exporter of service without payment of GST can claim ITC on the capital goods received and use it for payment of GST for domestic supply if any or for export of service on payment of GST under claim for rebate. However, he is not eligible to claim refund of such accumulated ITC of capital goods being not eligible. Expert's views please

[KASTURI SETHI]

Pl. refer to Rule 89(5) of CGST Rules, 2017 wherein formula has been prescribed for calculation of maximum refund amount. This formula has been substituted vide Notification No.26/18-CT dated 13.6.18 effective from 1.7.17. If we see the definition of 'Net ITC' it means input tax credit availed on inputs only.

Therefore, refund of such accumulated credit cannot be claimed.

[Atul Rathod]

Cannot claim the refund of credit oN CG against Export of service with LUT.

AI Summary

Exporters Can't Claim Refunds on Accumulated ITC for Capital Assets Like Computers Under GST Sections IGST & CGST. An individual inquired about the eligibility of claiming Input Tax Credit (ITC) on capital assets like computers for an exporter of services under the Goods and Services Tax (GST) framework. The responses clarified that while ITC can be claimed for zero-rated supplies, refund of accumulated ITC on capital goods is not permissible. The discussion referenced specific sections of the IGST and CGST Acts, highlighting that refunds are limited to inputs, not capital goods. The consensus was that refunds for accumulated ITC on capital assets are not allowed, even when exporting services under a Letter of Undertaking (LUT).