What is Inverted Duty Structure Refund and who can avail it Under GST?

Inverted Duty structure is the condition where tax rate payable on inputs is higher than tax rate charged on output of sales. When the input credit has been accumulated on account of inverted tax structure, but supplies of labor and products or both as might be told by the public authority on proposal of the council, then a registered person is eligible to claim refund of such accumulated ITC.

TIME LIMIT

According to 54(1) of the CGST Act, a taxable registered person can apply for refund within 2 years from the date of filing of return.

PROCESS OF CLAIMING REFUND UNDER INVERTED TAX STRUCTURE UNDER GST

An enlisted citizen might guarantee a discount of unutilized input tax reduction toward the finish of any expense period for which the credit by virtue of the pace of information sources being higher than the paces of duty on yield supplies.

1. File RFD-01 on GST portal within 2 years from the end of financial year in which refund is to be claimed. ARN receipt will be generated on the portal

2. Take the Print out of the filed application along with ARN receipts

3. Submit the printed documents along with other relevant supporting documents to the jurisdictional authority unless online return is not allowed

4. A tax official will process the refund and will disburse the refund manually

EXCEPTIONS WHERE REFUNDS CANNOT BE CLAIMED

1. Yield supplies are nil appraised or completely excluded supplies aside from provisions particularly informed by central government on recommendation of General Counsel

2. On the off chance that the merchandise sent out of India are liable to trade Duty

3. If supplier claims refunds of output Tax under IGST supply

4. If the supplier avails duty drawbacks or refund of IGST on such supplies

MAXIMUM AMOUNT OF REFUND

The most extreme sum that can be discounted is [(Turnover of transformed appraised supply of labor and products) x (Net info tax reduction/Adjusted aggregate turnover) – Tax payable on such inverted rate of supply of goods and services

ISSUES AND CONTENTIONS

An assembling industry might have different contributions with variable duty rates. In this case it is difficult to correlate the outputs with the inputs. Hence the result is in inaccurate computation of refund amount.

Author- CA.Madhuri Marne

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Company: Taxblock india Pvt.Ltd
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Taxblock India Private Limited, founded in 2019, is a fintech startup located in Pune, Maharashtra. We are enrolled as an E-Return Intermediary with Income Tax Department & have established an In-House team of Technology & Tax Experts to build a “Financial Compliance Ecosystem” for Indi View Full Profile

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2 Comments

    1. taxblock India Pvt.Ltd says:

      Hello, Renuka Miryala
      Thanks for reading our post.
      The limit for filing under inverted duty structure according to section 54 of CGST Act is 2 years. However you can file for an appeal under Income tax appeal commissioner if you have any genuine reason for the same. For any assistance you can mail us at [email protected]

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