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Excess ITC

Anshuman Basu (account -GST) (1556 Points)

01 December 2019

sir
We were commission agent. my business is closed in the month of March 2019.but we have a huge ITC in my electronic credit ledger
Now my question is how to refund my ITC?
and procedure to claim ITC

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9 Replies

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 01 December 2019

No way claim refund. ITC will be reversible if registration will be cancel...

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CA Poonam Chopda (Chartered Accountant) (55 Points)
Replied 01 December 2019

U can go through the electronic refund procedure issued by council in notification no. cgst - 125 dated 18.09.2019

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 01 December 2019

@ Mr CA Poonam Chopda.,

please can you give the said notification and details... How can get refund for the ITC...??

CA Poonam Chopda (Chartered Accountant) (55 Points)
Replied 02 December 2019

Link

https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.cbic.gov.in/resources//htdocs-cbec/gst/circular-cgst-125.pdf&ved=2ahUKEwiPk_f2vZbmAhXUW3wKHWSNDF0QFjAAegQIBBAB&usg=AOvVaw12P-3_9sI120G8cWmz2igc

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 02 December 2019

@ Mr CA Poonam Chopda.,

Thanks for the given link. But, It's circular.... Right...?!

But,

Where is noted refund process as per above query...?

please give guidance...

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debora M (BUSINESS DEVELOPMENT MANAGER) (1697 Points)
Replied 02 December 2019

Claim refund for itc

The input tax credit of a registered person remains unutilized in the following two scenarios:

where rate of tax on inputs is more than rate of tax on output supplies
accumulation of ITC on account of export of goods or services without payment of tax
However, it is important to note that the refund of unutilized ITC is not allowed where:

goods exported outside India are subject to export duty
supplier of goods or services avails drawback in respect of Central Tax
the supplier of goods or services claims refund of IGST paid on such supplies
Typically such unutilized credit is carried forward to the next financial year till the time it is utilized for the payment of output tax liability. However, as per the CGST act 2017, a registered person can claim refund of unutilized ITC at the end of any tax period.

A tax period is a period for which the return for tax is to be furbished. Thus,we can say that a registered taxpayer can claim refund of unutilized ITC every month. As per section 54(3) of the CGST act, refund of unutilized ITC is allowed in the following two scenarios:

a. Zero Rated Supplies Made Without Payment of IGST
A registered person can claim refund of any unutilized ITC in case of zero rated supplies made without payment of tax. This is to say that the registered person can claim refund of unutilized credit by making zero rated supplies under bond or LUT without payment of IGST.
1. Necessary Proof by the Applicant
The taxpayer needs to file an application to claim refund for unutilized ITC on account of zero rated supplies. Such an application is accompanied by prescribed documentary evidence. This evidence needs to be given in order to prove that:
refunds are due to the applicant
amount of tax and interest paid on tax is paid by the applicant
any other amount paid against which the refund is to be claimed was collected from and paid by the applicant
incidence of such tax and interest has not been passed to any other person
2. Documents to be filed with Application
Rule 89(2) of the CGST rules 2017 mentions the documentary evidences to be attached with the refund application. These documents need to be attached by different types of refund applicants. The documents include:
In case refund needs to be claimed for export of goods a statement needs to filed that contains:
number and date of shipping bills
date and number of relevant export invoices
Where refund is on account of export of services a statement needs to be filed that contains:
number and date of invoices
bank realization certificates or foreign inward remittance certificate
In case goods are supplied to SEZ unit or developer, the refund can be claimed by filing a statement containing:
number and date of invoices
evidence regarding endorsement by specified Zone officer
a declaration that certifies that the SEZ unit or developer has not availed the benefit of ITC of the tax paid by supplier
In case services are supplied to SEZ unit or developer, the refund can be claimed by filing a statement containing:
number and date of invoices
evidence regarding endorsement by specified Zone officer
details of payment and proof by the recipient to the supplier for authorized operations
a declaration that certifies that the SEZ unit or developer has not availed the benefit of ITC of the tax paid by supplier
3. Cases Where Documents Need Not Be Filed
As per section 54 of CGST act, a taxpayer needs to file a documentary evidence. Such evidence demonstrates that the amount of tax and interest or any other amount in relation to such refund is paid by the applicant. Furthermore, such evidence also declares that the incidence of such tax and interest has not been passed to any other person.
However, the applicant need not file such evidence mandatorily if the amount of refund to be claimed is less than Rs. 2,00,000. Instead, such an applicant needs to file a declaration certifying that such tax and interest has not been passed to any other person. Furthermore, such a declaration is based on documentary or other evidences available with him.
4. Manner of Granting Refund
The proper officer scrutinizes the evidence and amount of refund due to the applicant. On being satisfied, he sanctions the amount of refund due to the said applicant on a provisional basis. Such an amount is sanctioned within a period of 7 days from the date of acknowledgement given by the officer via common portal. This amount equals to 90% of total amount of refund to be claimed by the applicant. Such an amount excludes the amount of ITC provisionally accepted by the recipient. The proper officer issues a final order for grant of refund within 60 days from the date of receipt of application complete in all respects.
5. Formula for Grant of Refund
Following is the formula for the amount of refund to be granted where refund of accumulated ITC is due to zero rated supply.
Refund Amount = (Turnover of zero rated supply of goods + Turnover of zero rated supply of services) x (Net ITC/Adjusted Total Turnover)
Where,
Refund means maximum amount of refund admissible
Net ITC means ITC availed on inputs and input services during the relevant period
Turnover of zero rated supply of goods means value of zero rated supply of goods made without payment of tax under bond or LUT during relevant period.
Turnover of zero rated supply of services means value of zero rated supply of services made without payment of bond or LUT. Such supply is calculated in the following way:
Zero rated supply of services is the sum of payments received during relevant period for:
zero rated supply of services
the zero rated supply of services where supply has been completed for which payment has been received in advance. Such advance payment is received in any period prior to the relevant period.
The above amount is reduced by advances received for zero rated supply of services. These supply of services have not been completed during the relevant period.

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 02 December 2019

Well... I totally agree with Your above said points to Exports, Zero Rated Supplies & Inverted duty...

But,

Commission is not a zero rated supply & also no way for inverted duty. So, How is available refund...?

GST @ 18% in commission...

Check Out Your Understanding about the Commission business. Which way inputs available here...?

CA Poonam Chopda (Chartered Accountant) (55 Points)
Replied 02 December 2019

@ Raja P M
I would request you to kindly go through the entire circular
it very well explains the process, documents required, forms....
Also ask you to start with filling up the form as your doubts may get clear in the process itself.

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 02 December 2019

Okay...

thank you dear...

But, I don't think ITC refund available except chapter 10 of CGST...

And the circular also not says except the refund provisions...

Anyway thank You...