The GST Council’s 47th meeting was held in Chandigarh on June 28th and 29th, 2022 under the chairmanship of the Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman. The GST Council has inter-alia made recommended amendment in formula to calculate refund of unutilised input tax credit (“ITC”) in case of inverted duty structure (“IDS”):
- Change in formula for calculation of refund under Rule 89(5) of the Central Goods and Services Tax rules, 2017 (“the CGST Rules”) to take into account utilization of ITC on account of inputs and input services for payment of output tax on inverted rated supplies in the same ratio in which ITC has been availed on inputs and input services during the said tax period.
This would help those taxpayers who are availing ITC on input services also.
Rule 89(5) of the CGST Rules reads as under:
“89. Application for refund of tax, interest, penalty, fees or any other amount.-
(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” and “relevant period” shall have the same meaning as assigned to them in sub-rule (4)”
The Press release can be accessed at: https://www.pib.gov.in/PressReleasePage.aspx?PRID=1838020
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