Export Benefit under MEIS and Refund of ITC accumulated due to exports w/o payment of IGST

[Vinay Kunte]

We are Manufacturers of Readymade Garments are exporting Goods w/o payment of IGST, which is resulting in ITC accumulation. We are also claiming Benefit under MEIS and had also claimed benefit under RoSL as well as Duty Drawback.

Can we get these multiple benefits as exports by claim of Refund of Accumulated ITC or we need to reverse the ITC availed?

[KASTURI SETHI]

You can claim refund under Inverted Duty Structure scheme.

[Vinay Kunte]

Respected Kasturi Sir

This means if refund is claimed and sanctioned by GST authorities for GST ITC accumulated due export w/o payment of IGST needs to be repaid or reversed till date?

The MEIS is based on all Taxes involved in manufacture of Export goods or is it a scheme just like RoSL wherein the refund is based on the local taxes other than SGST on inputs and GST involved in procurement from Unregistered dealers in involved. Under duty drawback also the IGST paid on inputs is removed from the drawback rates.

Sir can you enlighten these factors for MEIS scheme as I have no knowledge of calculation rate of the scheme. You may suggest a reference book if it is difficult for you to reply which will consume a lot of your valuable time for my understanding please.

[Shilpi Jain]

Now in the place of MEIS it would be RoDTEP scheme. RoSCTL was notified by the Ministry of Textiles to rebate the incidence of various state and central taxes/levies on export of garments and made-ups.

There is not much clarity whether persons eligible for RoSCTL would be eligible for RoDTEP or not.

In addition to the above, as Kasturi sir has mentioned you can claim refund of the GST ITC under inverted structure or with payment of tax, whichever seems beneficial, considering the nature of expenses in respect of which credit has accumulated.

For accumulation on account of past period credits or on account of capital expenses, export with payment of taxes could be beneficial. However, a straight jacket formula cannot be put and has to be analysed on a case to case basis.

[Ganeshan Kalyani]

Export with payment of IGST is beneficial as compared to export under LUT. However, as opined by experts it has to be decided on case to case basis.

AI Summary

Refund of accumulated ITC or export with IGST payment - choose route based on credit nature and incentive interaction. Where ITC accumulates from zero-rated exports, exporters may either claim refund of accumulated ITC under the inverted duty structure or elect to export with payment of IGST and seek refund, with the preferable route determined case-by-case based on the nature of credits; interactions with export incentive schemes such as RoSCTL/RoDTEP and duty drawback require specific analysis.