Rules Rule 89(5) of CGST Rules,2017 Refund of Unutlised Input Tax Credit
Financial Year: 2017
Rule 89(5) of CGST Rules:
Maximum Refund Amount =
{(Turnover of inverted rated supply of goods) x Net ITC ÷ Adjusted Total Turnover}
- tax payable on such inverted rated supply of goods
Explanation:-
For the purposes of this sub rule, the expressions ?
Net ITC and ?
Adjusted Total turnover
shall have the same meanings as assigned to them in sub-rule (4)
Net ITC (As per Rule 89(4):-
Net ITC means Input Tax Credit Availed on Inputs and Input Services during the relevant period.
Adjusted Total Turnover :-
Means turnover in a state or a union territory, as defined under section 2(112),
excluding the value of exempt supplies
other than zero rated supplies, during the relevant period
|
Particulars |
Value |
GST |
Rate |
|
Purchase cost Raw Material |
10,00,000 |
1,20,000 |
12% |
|
Purchase of CA Services |
5,00,000 |
90,000 |
18% |
|
Total Input |
|
2,10,000 |
|
|
Sales |
15,00,000 |
75,000 |
5% |
|
Total Output |
|
75,000 |
|
|
Refund |
|
-1,35,000 |
|
{(Turnover of inverted rated supply of goods) x Net ITC ÷ Adjusted Total Turnover}
(15,00,000*210000)/1500000 -75000 = 135000
Amendment has been made via Notification No 21/2018 Central Tax dated 18th April 2018
For Notification, Click Below:
- in rule 89, for sub-rule (5), the following shall be substituted, namely:-
“(5). In the case of refund on account of inverted duty structure, refund of input tax credit shall be granted as per the following formula:-
Maximum Refund Amount =
{(Turnover of inverted rated supply of goods and services)
x Net ITC
÷ Adjusted Total Turnover}
- tax payable on such inverted rated supply of goods and services.
Explanation:- For the purposes of this sub-rule, the expressions –
(a) “Net ITC” shall mean input tax credit availed on inputs during the relevant period other than the input tax credit availed for which refund is claimed under sub-rules (4A) or (4B) or both; and
(b) “Adjusted Total turnover” shall have the same meaning as assigned to it in sub-rule (4).”
Refund Amount = 1500000*120000/1500000-75000
= 45,000 Rs.
Further Amendment has been made via Notification No 26/2018 Central Tax
With effect from 01st July, 2017,
For Notification, Click Below:
in rule 89, for sub-rule (5), the following shall be substituted, namely: -
“(5) In the case of refund on account of inverted duty structure, refund of input tax credit shall be granted as per the following formula:-
Maximum Refund Amount =
{(Turnover of inverted rated supply of goods and services)
x Net ITC ÷ Adjusted Total Turnover}
- tax payable on such inverted rated supply of goods and services.
Explanation:- For the purposes of this sub-rule, the expressions
(a) Net ITC shall mean input tax credit availed on inputs during the relevant period other than the input tax credit availed for which refund is claimed under sub-rules (4A) or (4B) or both; and
(b) Adjusted Total turnover shall have the same meaning as assigned to it in sub-rule (4)
Further Amendment has been made via Notification No 39/2018 Central Tax in which they changed the meaning of Adjusted Total Turnover which was mentioned in Sub rule 4
In the said rules, in rule 89, in sub-rule (4), for clause (E), the following clause shall be substituted, namely:-
(E) “Adjusted Total Turnover” means the sum total of the value of-
- the turnover in a State or a Union territory, as defined under clause (112) of section 2, excluding the turnover of services; and
- the turnover of zero-rated supply of services determined in terms of clause (D) above and non-zero-rated supply of services,
excluding
- the value of exempt supplies other than zero-rated supplies; and
- the turnover of supplies in respect of which refund is claimed under sub-rule (4A) or sub-rule (4B) or both, if any, during the relevant period.’.
|
Zero-rated supply of services is the aggregate of the payments received during the relevant period for zero-rated supply of services
and
zero-rated supply of services where supply has been completed for which payment had been received in advance in any period prior to the relevant period
reduced by advances received for zero-rated supply of services for which the supply of services has not been completed during the relevant period; |
Further Amendment has been made via Notification No 74/2018 dated 31st Dec 2018.
For Notification, Click Below:
In the said rules, in explanation (b) to sub-rule (5) of rule 89, the following clause shall be substituted, namely: -
Adjusted Total turnover and relevant period shall have the same meaning as assigned to them in sub-rule (4)
As per Sub Rule 4:- Relevant Period means the period for which the claim has been filed.
Also A Circular has also been issued
Circular No 79/53/2018
For Circular, Click below:
Gujrat High Court
VKC FOOTSTEPS INDIA PVT. LTD Versus Union of India Gujrat High Court Allowed Inverted Refund on Services as well.
For High Court Judgement, Click Below:
Supreme Court Judgement
VKC FOOTSTEPS INDIA PVT. LTD Versus Union of India
For Supreme Court Judgement, Click Below:
Latest Amendment
Notification No 14/2022 Central Tax
For Notification, Click Below:
In Rule 89
in sub-rule (5), for the words
tax payable on such inverted rated supply of goods and services, the brackets, words and letters
tax payable on such inverted rated supply of goods and services
x (Net ITC / ITC availed on inputs and input services)
shall be substituted;
(15,00,000*120000/15,00,000)- (75000*120000/210000)
= Rs 120000-42857
= Rs 77143/-