Restriction on refund of un-utlised ITC where the credit has accumulated on account of Rate of tax on Inputs being higher than the rate of tax on the output supplies of such goods(other than Nil rated and fully exempt supplies). - 05/2017 - Karnataka SGST

Karnataka GST Act: No Refund on Unutilized ITC for Certain Fabrics and Locomotives When Input Tax Exceeds Output Tax.

The Government of Karnataka issued a notification under the Karnataka Goods and Services Tax Act, 2017, specifying goods for which no refund of unutilized input tax credit (ITC) will be allowed when the tax rate on inputs exceeds that on output supplies. This applies to goods such as woven fabrics of silk, wool, cotton, man-made textiles, knitted fabrics, and various railway locomotives and parts. The restriction excludes nil-rated or fully exempt supplies. The notification, effective from July 1, 2017, is issued by the Finance Department on the recommendation of the Council.