Refund of IGST on Import

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Rekah (Querist)
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08 September 2022 Dear Sir,
My company is imported Raw Material from China, Process in India & exported to Canada. In this scenario our ITC credit is increase & balance is un-utilized. Can we apply directly refund from custom or can we import against advance license.

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)
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10 July 2024 In your scenario where raw materials are imported from China, processed in India, and then exported to Canada, resulting in an increase in Input Tax Credit (ITC) and an unutilized balance, there are a couple of options you can consider regarding refunds or utilizing the unutilized ITC:

1. **Refund of Unutilized ITC:**
- Under GST (Goods and Services Tax) in India, if you have accumulated unutilized ITC due to zero-rated exports (exports that have a GST rate of 0%), you can apply for a refund of this unutilized ITC.
- The process for claiming a refund involves submitting an application through the GST portal with the necessary documents and declarations.
- Typically, refunds can be claimed quarterly or annually, depending on the specific circumstances and GST rules at the time.

2. **Import Against Advance License:**
- Alternatively, if you have an Advance License issued under the Foreign Trade Policy (FTP) of India, you can import raw materials duty-free or at a reduced duty rate against this license.
- The Advance License scheme allows exporters to import inputs without paying basic customs duty, thus reducing the cost of imported materials used in manufacturing for export purposes.

**Steps to Consider:**

- **Verify Eligibility:** Ensure that your exports qualify for zero-rated supplies under GST provisions.
- **Maintain Documentation:** Keep all invoices, shipping documents, and records of exports to substantiate your refund claim.
- **GST Refund Application:** File the refund application through the GST portal within the stipulated time frames.
- **Advance License Application:** If applicable, apply for an Advance License from the Directorate General of Foreign Trade (DGFT) to import raw materials duty-free or at a reduced duty rate.

It's advisable to consult with a GST consultant or tax expert familiar with both GST regulations and export-import procedures to ensure compliance and maximize benefits under these schemes. They can provide specific guidance based on your company's circumstances and help navigate the application processes effectively.

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