Under CGST Rule 96(10), a registered person availing the benefit of zero-rated supplies under GST is restricted from claiming a refund of unutilized input tax credit (ITC) on account of the supply of goods or services or both by an unregistered supplier, unless the said tax on such supply has been paid by the supplier. This rule was introduced to prevent the practice of claiming a refund on ITC where the GST was not paid by the supplier.
Deemed export refers to the supply of goods that are manufactured in India but not sold in the domestic market. Such goods are treated as exports under the GST law and are eligible for certain benefits like refund of taxes paid on inputs used in the manufacture of these goods, among others. Some examples of deemed exports under GST include supply of goods to a Special Economic Zone (SEZ) unit or developer, supply of goods to an Export Oriented Unit (EOU), supply of goods to a project funded by multilateral or bilateral agencies or the government, among others.
CGST Rule 96(10) is a provision under the Central Goods and Services Tax (CGST) Rules that imposes restrictions on the refund of unutilized input tax credit (ITC) accumulated on account of inverted tax structure for exporters. The rule states that the refund of unutilized ITC is allowed only to the extent of the input tax credit on inputs used in making taxable supplies, excluding the tax paid on input services. This means that the refund of unutilized ITC on account of input services is not allowed under this rule, except in certain cases as notified by the government. This restriction applies to both goods and services exports.
CGST Rule 96(10) pertains to the refund of unutilized input tax credit (ITC) for supplies made to a Special Economic Zone (SEZ) developer or SEZ unit without payment of tax. The rule was introduced in 2018 and has been subject to various interpretations and challenges.
The rule restricts the refund of unutilized ITC for supplies made to SEZ developers or SEZ units in cases where the payment for such supplies has not been received within a stipulated time frame. As per the rule, a supplier is required to pay the tax on such supplies, and then claim the refund of the unutilized ITC.
However, the restriction under CGST Rule 96(10) has faced legal challenges, with various high courts and tribunals holding the rule to be ultra vires of the CGST Act. The rule has been subject to multiple amendments, with the latest amendment being made in August 2021.
As of now, the restriction under CGST Rule 96(10) is in force, and suppliers are required to comply with the same while claiming the refund of unutilized ITC for supplies made to SEZ developers or SEZ units. However, it is advisable to consult a tax expert or legal professional for detailed advice on the matter
CGST Rule 96(10) restricts the refund of unutilized input tax credit (ITC) to exporters who have not received payment for their exports. This rule applies to goods exported under Letter of Undertaking (LUT) as well as goods exported on payment of integrated tax.
Deemed exports refer to the supply of goods within India that are treated as if they have been exported. Examples of deemed exports include supplies made to units in Special Economic Zones (SEZs), supplies made to Export Oriented Units (EOUs), and supplies made to projects funded by international organizations. Deemed exports are eligible for certain benefits such as exemption from the payment of integrated tax.
Under CGST Rule 96(10), a registered person who has availed ITC on inputs or input services and has exported goods on payment of integrated tax or under LUT is eligible for a refund of unutilized ITC. However, the refund of unutilized ITC is restricted in cases where the exporter has not received payment for the exported goods within the time frame specified by the Reserve Bank of India (RBI).
The RBI has specified that the payment for exports of goods must be received within nine months from the date of export. If the payment is not received within this time frame, the exporter is not eligible for a refund of unutilized ITC under CGST Rule 96(10).
Yes, deemed exports are eligible for a refund of unutilized ITC. However, the refund of unutilized ITC is subject to the conditions and restrictions specified in the GST law.
To claim a refund of unutilized ITC for deemed exports, the following conditions must be met:
a. The supplier of goods must be a registered person
b. The recipient of goods must be an EOU, SEZ unit, or a project funded by an international organization
c. The goods must be manufactured in India
d. The recipient of goods must not have paid any tax on the supplies received
e. The supplier of goods must not have availed any drawback on the supplies
f. The supplier of goods must file a refund claim in Form GST RFD-01
No, the recipient of deemed exports is not eligible for a refund of tax paid on the supplies received, as they are treated as exports under the GST law. However, the recipient may claim a refund of tax paid on the supplies received under other laws such as the Customs law.
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