GST Refund_Inverted Duty Refund

[umeshkumar jhawar]

Taxpayer is manufacturer purchased Raw material at 18%.

Sale includes both Domestic sales and Export with Payment of duty at 5%.

We have received refund from custom on account of Export with payment of duty. Now while going for Inverted duty refund, whether Inverted Sale Turnover includes Export with payment of duty which is at 5%.

[Raam Srinivasan Swaminathan Kalpathi]

Dear Querist

Foremost, kindly use the appropriate words. You have exported not with payment of DUTY but with payment of IGST and refund has got automatically credited to your account upon correct upload of port code, SB No. and SB date. Correct?

Secondly, whether it is exports or domestic, refund on account of inverted duty structure (IDS) is eligible on the turnover effected which pertains to the IDS.

[umeshkumar jhawar]

Dear Sir

Thank you for immediate reply to our Query.

1. We have exported goods with payment of IGST and same is credited by Custom after filing GSTR-1 and GSTR-3B as per amount mentioned in GSTR-1 under Export with Payment of IGST details.

2. Second query, I wished to address with following example.

During march 2025 Total sales was Rs 10,00,00,000/- out of which Domestic Sales @ 5% is Rs. 3,00,00,000/- and Export Sales with Payment of IGST @ 5% Rs, 7,00,00,000/-.

Raw Material purchased is @ 18% Tax Rate.

My Question is while applying for Inverted Duty Structure (IDS) refund, in Tunover for Inverted duty refund i.e. lower output sales whether both (Domestic Sales Rs. 3,00,00,000/- and Export Sales with Payment of IGST Rs. 7,00,00,000/- will included or not.

[Shilpi Jain]

The export turnover will also be part of the turnover for the IDS refund calculations.

[umeshkumar jhawar]

Dear Madam

Thank you for reply.

That means I can claim the refund on Export Turnover i.e. at Export with Payment of IGST @ 5% in IDS refund.

[Suresh Yadav]

As per proviso Section 54(3) of CGST Act, 2017

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.

For IDS refund calculations -Turnover for Inverted duty refund will be 3 Cr only.

[Pinnacle Tax Advisor]

Because Export turnover was also charged GST at lower rate as compared to your inward, it will be included in turnover of inverted duty supply

AI Summary

Inverted duty structure refund under GST excludes export turnover with IGST payment from the refund calculation base.
Inverted duty structure refund under GST is discussed for a manufacturer making domestic supplies and exports with payment of IGST. The main issue is whether export turnover with payment of IGST is included in the turnover used for IDS refund calculations. One view treats export turnover as part of the refund base, while another view, relying on the proviso to section 54(3) of the CGST Act, states that IDS refund is not available on exported supplies where IGST refund is claimed, and only domestic turnover is counted.