Refund on Ineligible ITC

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This discussion explores the possibility of obtaining a refund for Input Tax Credits (ITC) that are deemed ineligible. While some consultants claim to have successfully processed such refunds for clients, the general consensus among experts is that refunds are strictly limited to eligible ITC, particularly in cases of export supplies or under an inverted duty structure. Claiming refunds for ineligible ITC is advised against, as it could lead to penalties.

Vignesh Raja

Vignesh Raja (Querist)
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30 April 2024 Hi All,

Could you give me some suggestions on whether it's possible to receive a refund for ineligible tax credits? I recently spoke with a consultant who claimed that it might be possible, but I'm unsure. Any insights would be appreciated.

If Possible, Kindly let me know the Act, Provisions or Rules

Thanks & Regards
Vignesh

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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01 May 2024 Not possible don't take wrong advice you will land in high penalty.

CA. Bhavik P. Chudasama

CA. Bhavik P. Chudasama (Expert)
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01 May 2024 Totally agree with Expert's View, Refund is only available for Eligible ITC and that too only in case of Export Supply or Supply under Inverted Duty Structure. So in no case Ineligible ITC can be availed and if it cannot be availed you can claim refund as well.

Vignesh Raja

Vignesh Raja (Querist)
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01 May 2024 Hi Experts,

Thanks for the Inputs
The consultants claimed to have submitted refund applications solely for ineligible Input Tax Credit (ITC) and received refunds for 4 to 5 clients. I'm wondering if this is feasible.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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02 May 2024 You are welcome.
Later they will face penalty with refund of wrong ITC claim.

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