Under the GST regime, a registered person can claim a refund of any unutilized Input Tax Credit (ITC) that has accumulated on account of the rate of tax on inputs being higher than the rate of tax on output supplies (except zero-rated supplies) or on account of the output supplies being exempt. The refund of unutilized ITC can be claimed in the following cases:
1. Export of goods or services: A registered person can claim a refund of unutilized ITC on account of the export of goods or services without payment of tax.
2. Inverted duty structure: A registered person can claim a refund of unutilized ITC on account of the inverted duty structure, where the rate of tax on inputs is higher than the rate of tax on output supplies (except zero-rated supplies) or on account of the output supplies being exempt.
3. Accumulation due to inverted duty structure: A registered person can claim a refund of unutilized ITC on account of the accumulation of ITC due to the inverted duty structure for a period of up to one year from the end of the financial year in which such ITC was accumulated.
The process of claiming a refund of unutilized ITC under GST is as follows:
1. File an application for refund: The registered person needs to file an application for refund of unutilized ITC in Form GST RFD-01 on the GST portal.
2. Submit the required documents: The registered person needs to submit all the required documents along with the application for refund of unutilized ITC. The documents required may vary depending on the nature of the refund claim.
3. Verification of the refund claim: The tax authorities will verify the refund claim and may seek additional information or documents if required.
4. Refund order: If the tax authorities are satisfied with the refund claim, they will issue a refund order in Form GST RFD-06, and the refund amount will be credited to the bank account of the registered person.
It is important to note that the refund of unutilized ITC can only be claimed if the registered person has filed all the required GST returns and has paid all the taxes due under the GST regime.
Input Tax Credit (ITC) is the credit that a registered person can claim for the taxes paid on inputs used in the course or furtherance of business. Under the GST regime, ITC is available on the taxes paid on inputs, capital goods, and input services used for the taxable supplies made by the registered person.
The concept of ITC is based on the principle of tax on value addition, which means that tax is levied on the value added at each stage of the supply chain. The GST paid on inputs is allowed as a credit to the registered person, which can be used to offset the output tax liability on supplies made by the registered person.
ITC can be claimed by a registered person on the following taxes paid under the GST regime:
1. Integrated GST (IGST) paid on the interstate supply of goods and services
2. Central GST (CGST) paid on the intrastate supply of goods and services
3. State GST (SGST) paid on the intrastate supply of goods and services
The conditions for claiming ITC under the GST regime are as follows:
1. The registered person must be in possession of a valid tax invoice or debit note.
2. The tax charged on the tax invoice or debit note must have been paid to the government.
3. The goods or services on which ITC is being claimed must have been used or intended to be used in the course or furtherance of business.
4. The registered person must have filed all the required GST returns.
It is important to note that certain goods and services are not eligible for ITC under the GST regime, such as motor vehicles, goods and services used for personal consumption, and goods and services used for non-business purposes. Additionally, ITC cannot be claimed on goods and services used for making exempt supplies.
To claim a refund of unutilised ITC under GST, the registered person needs to file Form GST RFD-01 on the GST portal. The application must be filed within two years from the relevant date.
The relevant date for filing a refund application under GST is as follows:
1. In the case of export of goods and services, the relevant date is the date of shipping bill or bill of export.
2. In the case of supplies made to SEZ units and developers, the relevant date is the date of receipt of payment.
3. In the case of inverted duty structure, the relevant date is the end of the financial year in which the claim for refund arises.
4. In the case of any other refund claim, the relevant date is the date of payment of tax.
3. Can a registered person claim a refund of ITC on the input services used for making exempt supplies?
No, a registered person cannot claim a refund of ITC on the input services used for making exempt supplies. The ITC can only be claimed on the inputs, capital goods, and input services used for making taxable supplies.
Yes, a registered person can claim a refund of ITC on the input tax paid on capital goods. However, the refund of ITC on capital goods is allowed only when the capital goods are used for making taxable supplies.
Yes, a registered person can claim a refund of ITC if the rate of tax on input is higher than the rate of tax on output. This is known as an inverted duty structure. However, the refund of ITC in such cases is subject to certain conditions and limitations.
