Refund of ITC in case of Export with payment of Tax

[abhishek Mittal]

ITC availed on Goods Purchase 1 Lakh

ITC availed on services used 0.5 lakh

Total ITC availed 1.5 lakh

100% export with payment of tax

ITC used while filing GST Return 1.2 lakh

Now how to get 0.3 lakh ITC Refund. Can refund be applied in this case, if yes, how.

Kindly advise?

[Amit Agrawal]

Section 54 (3) of the CGST Act, 2017 reads as follows:

"Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input tax credit at the end of any tax period:

Provided that no refund of unutilised input tax credit shall be allowed in cases other than––

(i) zero rated supplies made without payment of tax;

(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:

Provided further that no refund of unutilised input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty:

Provided also that no refund of input tax credit shall be allowed, if the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid on such supplies."

Accordingly, you cannot claim refund of unutilised ITC in given situation. You need to utilise it for future outward liability (i.e. against domestic supply and / or by exporting goods / services with payment of taxes and then, claiming refund of taxes so paid).

These are ex facie views of mine, the same should not be construed as professional advice / suggestion.

[Padmanathan KV]

I agree with views shared by Ld. Amit Ji.

As per Sec. 54(8)(a), the refund of only the tax paid on export of goods or services or both or on inputs or input services used in making such export shall be available.

Unutilized ITC can not be claimed as refund and such ITC can be only utilized for future transactions.

[Shilpi Jain]

If this is the limitation that you have then you must consider exporting under LuT. Here the timing of purchase and sale will have to be handled carefully to ensure that full credit refund in obtained.

AI Summary

Refund Denied for Unutilized ITC on Exports with Tax Payment Under Section 54(3) of CGST Act 2017 A participant in a discussion forum inquired about obtaining a refund for unutilized Input Tax Credit (ITC) of 0.3 lakh after using 1.2 lakh ITC on exports with tax payment. Respondents clarified that under Section 54(3) of the CGST Act, 2017, refunds for unutilized ITC are not allowed in this scenario. Instead, the ITC should be used for future tax liabilities. One suggestion was to consider exporting under a Letter of Undertaking (LuT) to manage timing of purchases and sales for optimal credit utilization.