ITC accumulation on account of higher GST rate on supplies recived rather than reduced gst rate levied on supplies manufactured by us

[Navid Mukadam]

Esteemed Experts

I am inquiring about the fact that we are in the supply of veterinary products, and the GST rate on supplies has been reduced from 12% to 5%. This has resulted in a reduction in our liability, which can be offset by the ITC that is available in our ledger and currency. payment

However, the accumulation of ITC in the electronic ledger will be influenced by the 18% GST on supplies received from the vendor.



Therefore, the appropriate course of action for this ITC is to determine whether it should be reversed or refunded.? 

please provide a detailed view

AI Summary

Exporter ITC treatment when outward GST falls to 5% while inward supplies at 18% - reversal, carry forward, or refund If outward supplies' GST rate fell from 12% to 5% while inward supplies attract 18%, the exporter may face unutilized ITC. Reversal is required only to the extent inputs/inputs services are used for exempt/non-taxable supplies or non-business use; otherwise ITC is generally carried forward. A refund of unutilized ITC is available under the GST refund provisions for an inverted duty structure subject to statutory conditions (eligibility, proper returns, invoices, and prescribed procedure); otherwise the credit remains in the electronic ledger to be utilized against future tax liability. Assess classification of supplies, usage of inputs, and statutory refund conditions, and obtain a professional GST opinion before reversing credits or filing for refund.