Legal Requirement:–

The dealer who has mainly export can claim the refund either through LUT or by utilisation of Input Tax Credit available with them for payment of integrated tax on export of goods out of India.

In case of zero-rated supply of goods or services or both without payment of tax under bond or letter of undertaking in accordance with the provision of sub section (3) of section 16 of the integrated goods and service tax Act, 2017 (13 of 2017), refund of input tax credit shall be granted as per following formula-

Maximum refund amount = Turnover of zero rated supply of goods x Net ITC divided by Adjusted total turnover.

Refund means maximum refund is that is admissible.

Net ITC means input tax credit availed on inputs and inputs services during the relevant period.

“Turnover of Zero-rated supply of goods” means the value of zero- rated supply of goods made during the relevant period without payment of tax under bond or letter of undertaking;

“Turnover of Zero- rated supply of services” means the value of zero rated supply of services made without payment of tax under the bond or letter of undertaking,

Adjusted total turnover means the turnover in a state or a union territory, as defined under sub-section (112) of section 2, excluding value of exempt supplies, during the relevant period;

Relevant period means the period for which the claim has been filed.

Any person claiming refund other than the refund of integrated tax paid by him on goods out of India can file may file an application electronically in Form GST RFD 01 through the common portal.

Issue when person filing refund through RFD-01.

A person who has taken Input tax credit in the form of Input services, capital goods and inputs while claiming the refund cannot claim credit for capital goods since it is clearly defined in the Rule 89 of CGST Act 2017, Net credit means input tax credit availed on inputs and inputs services during the relevant period however does not includes ITC on capital goods therefore he cannot apply for refund of ITC paid on capital goods. The authority may disallow this credit and will reduce your Net ITC to the extent of Capital goods.

However if the same ITC on capital goods utilised for payment of Integrated tax on export of goods out of India then he is eligible for the same and he can claim the refund of ITC on capital goods.

Ideally we don’t understand this logic wherein law maker one case allow it if it is paid by way of IGST on export of goods however the same ITC on capital goods claim through RFD 01 then it is disallowed.

GST council need to get clarification on this anomaly and provide concrete solution.

Suggestion:-

Hence exported oriented company, it is advisable to go for IGST paid refund for unutilised credit available with them till the time GST council come up with any further clarification on this issue.

Happy filing refund…..

(The author is a member of the Institute. He can be reached at [email protected])

Author Bio

Qualification: CA in Job / Business
Company: Mahindra Holidays and Resorts India Ltd.
Location: Maharashtra, IN
Member Since: 05 Dec 2018 | Total Posts: 3

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5 Comments

  1. VEERESH says:

    MY QUESTION IS:- I HAVE STARTED A GYM BUSINESS FOR THAT I HAVE PURCHASED GYM EQUIPMENTS OF RS. 2000000/- (INCLUSIVE OF CGST & SGST). NOW MY TURNOVER IS NOT EVEN RS 100000/- SO CAN I CLAIM REFUND OF ITC WHICH IS PAID ON PURCHASE OF GYM EQUIPMENTS?(MY BUSINESS IS IN LOSS EVEN I WANT OT CLOSE BUSINESS ALSO)SO SHALL I GET REFUND OF GST ?

  2. Simran Katyal says:

    Suppose, we want to have paid GST on Import of Services under RCM, and we are engaged in export of services..
    Can we claim refund of such accumulated ITC (of GST paid under RCM) ?

    Thanks,
    Simran Katyal
    Mail id : [email protected]

  3. CA V K Banka says:

    Sir
    Rule 96(10) bar to take refund of igst paid on export incase exporter has taken benefit of notification 73 and 74 of custom or notification 48, 40, 41 of cgst. So an EOU can not opt for rule 96(10). In such a situation gst paid on capital goods will remain blocked….

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