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Refund Of input tax

Bishal Dutta (101 Points)

04 June 2018

is it true that we can get refund for the excess input tax we pay??

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CA Shivam Arora (Chartered Accountant) (2414 Points)
Replied 04 June 2018

Yes, due to inverted tax structure you may claim refund. For example you are purchasing raw material at 28% tax rate but your output is liable to 18% rate. So here you can claim ITC.

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Bishal Dutta (101 Points)
Replied 04 June 2018

Thank You Very Much Sir.

Siddharth Goel (Chartered Accountant) (3031 Points)
Replied 04 June 2018

Under GST, a refund can be claimed by taxpayer for any tax and interest paid or any other amount of GST by making an application for GST refund before 2 years from the relevant date.

In such a scenario, it is possible for some taxpayers to accumulate input tax credit that cannot be set off against GST liability. Hence, the GST Act provides a procedure for applying for a refund of unutilised input tax credit. According to the GST Act, only the following of unutilised input tax credit will be eligible for a refund:

Zero rated supplies made without payment of tax;
Input tax 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).

It is important to note that the Act does not allow refund of unutilised input tax credit where the goods exported out of India are subjected to export duty. Also, no refund of input tax credit is allowed, if the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid on such supplies.

You can refer to the following article for a better understanding: https://www.caclubindia.com/articles/faqs-on-refund-under-gst-32501.asp