As per Rule 89 of CGST Rules,
Maximum Refund Amount = [(Turnover of inverted rated supply of goods and services) x Net ITC ÷ Adjusted Total Turnover] - [Tax payable on such inverted rated supply of goods and services x (Net ITC ÷ ITC availed on inputs and input services)]
Should input tax claimed under the head of RCM be included in 'ITC availed on inputs and input services' while calculating the refund amount? [Note: RCM has been paid on inward services received]
Debate on Including RCM ITC in Refunds for Inverted Duty under Rule 89 of CGST Rules Concludes with Consensus A discussion on a forum addressed whether input tax credit (ITC) claimed under Reverse Charge Mechanism (RCM) should be included in the calculation of refunds for an inverted duty structure under Rule 89 of the CGST Rules. Participants agreed that ITC of RCM paid on inward services can be included in the refund formula. However, there was a consensus that the refund on ITC for services is generally not available, thus limiting the relevance of including RCM paid on inward services. The discussion concluded with acknowledgment of the shared insights. (AI Summary)
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