The term “Inverted Tax
Structure” implies the circumstances
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.
As per section 54(3)(ii)
of the GST Act, a registered person may claim refund of any unutilized ITC at
the end of any tax period: 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.
Manner for
determination of amount of refund and procedure for claiming refund are
contained in Rule 89 of the GST Rules.
Pre-conditions of claiming refund:
1.
The taxpayer is
registered with GST Department and holds an active GSTIN during the period for
which refund I being applied for.
2.
Form GSTR-1 and
a valid GSTR-3B Return must have been filed for the relevant tax period.
3.
Sec. 54(3)(a)
has laid down two conditions:
·
Rate of tax on
inputs is higher: and
·
Rate of tax on
output supplies (of goods and/or services) is lower
4.
All the
conditions and restrictions specified in sec. 16 and 17 of the GST Act for
claiming the input tax credit must have been satisfied. Further, refund of such
ITC cannot be claimed which is blocked under section 17(5) of the CGST Act.
Formula for calculating the amount
of Refund:
Refund of ITC on
account of inverted duty structure shall be granted as per the following
formula prescribed in Rule 89(5)
Maximum Refund Amount =
[Turnover of inverted rated supply of goods & services * Net ITC / Adjusted
Total Turnover] – [Tax payable on such inverted rated supply of goods &
services * Net ITC / ITC availed on inputs and input services]
Net ITC:- Refund of
unutilized ITC in case of inverted tax structure, as provided in section 54(3)
of the GST Act, is available where ITC remains unutilized even after setting
off of available ITC for the payment of output tax liability. Where there are
multiple inputs attracting different rates of tax, in the formula provided in
rule 89(5) of the GST Rules, the term “Net ITC” covers the ITC availed on all
inputs in the relevant period, irrespective of their rate of tax.
Documents to be filed along with RFD-01
·
Copy of GSTR2B
of the relevant period
·
Statement of
invoices (Annexure-B)
·
Self certified
copies of invoices entered in Annexure-B whose details are not found in GSTR-2B
of the relevant period.
Declaration/Statement/undertaking/Certificate to be
filled online:
·
Declaration
under second and third proviso to sec 54(3)
·
Declaration under
section 54(3)(ii)
·
Undertaking in
relation to section 16(2)© and Section 42(2)
·
Statement 1A
under rule 89(2)(h)
·
Self declaration
under rule 89(2)(1) if amount claimed does not exceed INR 2 lakh.
Disclaimer:
All the Information is based on the notification, circular and order issued by
the Govt. authority and judgement
delivered by the court or the authority information is strictly for educational
purposes and on the basis of our best
understanding of laws & not binding on anyone.
