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1 
08 Sep 2026 
4 Replies 
427 Views Dear Sir
We are manufacture of corrugated boxes and charge 5% GST. We are Purchasing Paper & Paper Sheet @18% and Some of The Work Like Punching, Printing and Laminating we are taking from outsources and They are Charging 18% GST,
Our query is
1) Is there any restriction with respect to refund of ITC on job work? Please Guide
0 Certainly. Here is a concise version:
Conclusion: There is no blanket restriction on claiming ITC of GST charged at 18% by job workers merely because the services are punching, printing or laminating.
If these services are used in the course of manufacturing/supplying your corrugated boxes and the normal conditions for ITC are satisfied, the 18% GST charged by the job worker can generally be availed as ITC.
However, ITC eligibility and refund eligibility are separate issues. Since your outward corrugated-box supplies are taxed at 5%, while paper and certain job-work services bear GST at 18%, accumulation may potentially qualify for refund under the inverted duty structure, subject to Section 54(3) and Rule 89.
Importantly, you cannot simply refund the entire accumulated ITC. The prescribed refund formula and applicable exclusions have to be applied.
For your case, the following should be verified:
Correct HSN and GST rate of the paper/paper sheets.
Correct SAC and GST rate of punching, printing and laminating services.
Whether the job workers are actually processing your goods/material.
Whether all such services are directly used for the 5% taxable outward supplies.
Eligibility of the ITC under Section 16 and absence of any restriction under Section 17(5).
Correct computation of the inverted-duty refund under Rule 89.
Therefore, the preliminary position is that 18% GST paid on eligible job-work services is not automatically barred from ITC or from consideration in an inverted-duty refund claim. The actual refundable amount must, however, be determined using the statutory formula and applicable exclusions.
0 Under Refund of Inverted duty structure refund of only input of goods is allowed. ITC of Input services and Input of capital goods is not allowed for refund under IDS. Accordingly refund ITC of paper sheet and paper can be considered for refund but ITC of job work since service is not eligible for refund under IDS.
This is illustration please put your details in this and check whether refund will come.
| Sr. No | Supply Type | Rate | Taxable Value | IGST | CGST | SGST | Total Taxes |
| 1 | Non-GST/Exempt Turnover | - | 60,000 | ||||
| 2 | Taxable (Inverted Duty) | 5% | 19,00,000 | 47,500 | 47,500 | 95,000 | |
| 3 | Taxable | 18% | 7,00,000 | 63,000 | 63,000 | 1,26,000 | |
| 26,60,000 | 1,10,500 | 1,10,500 | 2,21,000 | ||||
| Calculation of Adjusted Total Turnover | |||||||
| Sr. No | HSN | Taxable Value | |||||
| 1 | Total Turnover as per GSTR 1 | 26,60,000 | |||||
| 2 | Less: Non-GST Turnover | 60,000 | |||||
| Adjusted Total Turnover | 26,00,000 | ||||||
| Input tax credit summary | |||||||
| Sr. No | Input Type | IGST | CGST | SGST | Cess | Total Taxes | |
| 1 | Goods | 1,53,000 | 1,53,000 | 3,06,000 | |||
| 2 | Service | 36,000 | 36,000 | 72,000 | |||
| 3 | Capital Goods | 45,000 | 45,000 | 90,000 | |||
| Total | - | 2,34,000 | 2,34,000 | - | 4,68,000 |
| Amount (Rs. ) | ||
| Sr. No | Particulars | |
| 1 | Net ITC (Input of Goods) | 3,06,000 |
| 2 | Turnover of inverted rated supply of goods and services | 19,00,000 |
| 3 | Adjusted Total Turnover | 26,00,000 |
| 4 | Tax payable on such inverted rated supply of goods and services | 95,000 |
| 5 | ITC availed on (Inputs and Input services) | 3,78,000 |
| A | {Net ITC * Turnover of inverted rated supply of goods and services / Adjusted Total Turnover} (1*2/3) | 2,23,615 |
| B | {tax payable on such inverted rated supply of goods and services x (Net ITC / ITC availed on inputs and input services)} (4*1/5) | 76,905 |
| I | Maximum Refund As per formula (A-B) | 1,46,711 |
0 IDS refund restricted to the ITC related to inputs. Capital goods and input services ITC not eligible for refund.
TaxTMI 
TaxTMI 
Section 54(3)(ii) reads as under:
(3) 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: