GST Refund under Inverted Duty Structure without Export

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Article Assistant
78 Points Joined August 2012

Dear Sir/Madam,

 

One of client would like to apply for GST Refund on Inverted Duty Structure (Without Export)

Goods are at @ 5%, input Goods are at 18%.

I Would like to know the , is the GST Department issuing refunds under this under Inverted Duty Structure (Without Export).

 

Some of my friends saying that they are issuing GST refunds.

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On 20 June 2025 at 19:37 Report
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Master in Accounts & high court Advocate
9157 Points Joined December 2011

The GST department does issue refunds under the Inverted Duty Structure (IDS) for domestic supplies without exports.

According to Section 54(3) of the CGST Act, 2017, a registered person can claim a refund of unutilized Input Tax Credit (ITC) when the tax rate on inputs is higher than the tax rate on output supplies. *Key Points to Consider:* - 

*Eligibility*: The refund is applicable when the input tax rate exceeds the output tax rate, resulting in accumulated ITC. - 

*Formula for Refund Calculation*: The maximum refund amount is calculated using the formula: {(Turnover of inverted rated supply of goods) x Net ITC ÷ Adjusted Total Turnover} – tax payable on such inverted rated supply of goods. - *Recent Amendments*: 

The formula was amended vide Notification No. 14/2022-CT dated 5th July 2022, to include input services in the calculation of Net ITC, making more ITC eligible for refund. - *Documentation*: 

To claim a refund, you'll need to file FORM GST RFD-01A and provide supporting documents, including invoices and payment receipts.

 *Examples of Inverted Duty Structure:* - A trader purchasing LPG gas at 18% GST and selling it at 5% GST to domestic customers. - An IT company supplying information technology products to government departments, PSUs, and research institutions at 5% GST, while procuring the same products at 18% GST.

 It's essential to ensure that your client meets the eligibility criteria and follows the proper procedure for claiming a refund under the Inverted Duty Structure.

 

You may want to consult a tax professional or chartered accountant to guide you through the process.

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On 23 June 2025 at 11:58


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