TaxTMI 
TaxTMI 
ITC accumulation on account of higher GST rate on supplies recived rather than reduced gst rate levied on supplies manufactured by us
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....TC accumulation on account of higher GST rate on supplies recived rather than reduced gst rate levied on supplies manufactured by us<br> Query (Issue) Started By: - Navid Mukadam Dated:- 14-9-2025 Last Reply Date:- 16-9-2025 Goods and Services Tax - GST<br>Got 4 Replies<br>GST<br>Esteemed Experts I am inquiring about the fact that we are in the supply of veterinary products, and the GST rate on s....
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....upplies 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 ....
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....be reversed or refunded.? please provide a detailed view Reply By Sadanand Bulbule: The Reply: This is a clear case of Inverted Duty Structure [IDS]. Since your output supply (veterinary products) is now taxed at 5% but your inputs are coming with GST at 12%/18%, ITC accumulation is bound to happen. You don't have to reverse this ITC. Credit taken is correct as long as goods/service....
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....s are used for business. The option available is to apply for refund of unutilised ITC under Section 54(3) of CGST Act read with Rule 89(5). Veterinary products are not under the restricted category, so refund should be admissible. This is the classic situation stems due to reduction of rate of tax in pursuance of GST-02. Hence the taxpayers may adopt either of the options available to them.....
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.... There is nothing to fret about the stock of accumalated ITC. It is as intact as cash in the safe locker. Reply By KASTURI SETHI: The Reply: No reversal is required in this scenario. Such accumulated ITC will not lapse. Such accumulation is due to reduction of rate of tax and NOT due to full exemption. Reply By Sadanand Bulbule: The Reply: Plz refer CBIC Circular....
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.... No. 135/05/2020 - GST, dated the 31st March, 2020 Reply By Shilpi Jain: The Reply: Apply for refund in respect of this inverted duty structure scenario. Latest press release regarding GST 2.0 also provides faster provisional refunds in this kind of scenario from 1st Nov onwards. <br> Discussion Forum - Knowledge Sharing ....