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Refund of GST Input Credit

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ramesh babu

25 Points Posted on 08 April 2022

Sir/Madam,

A Private Company is having GST Registration in Delhi. Its main business is News Service. It has more input of GST than output.

The current balance of Electronic Credit Ledger is Rs 50 lacs.

Please advise whether the said Company ask refund of the ITC Balance of Rs 50 Lacs. Kindly enumerate the pre-conditions, if any, to be satisfied by the said Company to get refund.

Thanks

Replies (5)

Quick Summary

This discussion clarifies the eligibility for a GST input credit refund for a private company in Delhi whose input GST exceeds output GST, with a current credit ledger balance of ₹50 lakhs. The key factor for eligibility is an 'inverted duty structure', where the GST rate on inward supplies (purchases) is higher than on outward supplies (sales). If the credit accumulation is solely due to higher purchase volumes rather than a rate disparity, a refund is generally not permissible. The company appears eligible due to an 18% GST on inputs versus 5% on outputs and is advised to consult a professional for the refund application process.

Shubham Dhakrey

38 Points Posted on 08 April 2022

Please note that the said case falls under the category of Refund of ITC related to inverted duty structure only if the accumulation of ITC is due to the rate of GST on inward supplies is more than the rate of GST on outward supplies. If the accumulation is just because higher amount of purchases and expenses are done as compared to outward supplies then such refund shall not be allowable.

ramesh babu

25 Points Posted on 09 April 2022

Sir, thanks for your kind reply. The GST rate on purchase is 18% and GST rate on sales is 5%.

CA Puja Sharma

Chartered Accountant

3528 Points Posted on 09 April 2022

GST refund is only allowed in case of an inverted duty structure and exports.

Inverted duty structure refers to the case where the rate of GST is more on inputs than that of outward supplies.

Shubham Dhakrey

28 Points Posted on 09 April 2022

Then Mr. Ramesh Babu you are eligible for a refund. Would request you to consult a professional for this engagement of application and sanction of refund from GST authority. Hope, you get your refund as soon as possible.