GST ITC refund (for exempt output)

[Yash Jain]

We are manufacturer and trader.

For mfg, we buy input goods(5%) and output is taxable (5%) and exempt.

Due to rule 42, we do itc reversal also.

We are accumulating huge inputs and even after reversal and setoff for sales, ITC is left.

Can we claim ITC refund .? What will be procedure and under which section we can claim

AI Summary

Input tax credit refund not available for accumulated credit from exempt supplies; verify ITC reversal and eligibility.
Refund of accumulated input tax credit arising from a mix of taxable and exempt supplies is not admissible under Section 54; instead verify correct ITC reversal under Rule 42 and assess whether accumulation reflects incorrect value addition, improper reversal calculation, or inclusion of ineligible credits. Modest or non recurring balances may be absorbed in future taxable supplies, but taxpayers must reconcile inward credits, exclude ineligible items, and seek professional advice to correct reporting and reversal procedures rather than seek refund relief.