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Refund of ITC claimed on capital good

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Karan

Proprietor

25 Points Posted on 20 April 2020

Hi,

A client of mine bought a machinery for the business and claimed Rs 190000 as ITC.

Now the client wants to claim this ITC as a refund to the bank account.

Is refund of ITC claimed on machinery or capital goods allowed? as per my understanding it is not but I just wanted any experts opinion.

Thanks,

Neha

Replies (4)

Quick Summary

This discussion clarifies whether a refund of Input Tax Credit (ITC) claimed on capital goods, such as machinery, is permissible. Experts confirm that ITC on capital goods cannot be directly refunded to a bank account. Refunds are generally limited to cases of inverted duty structures or zero-rated supplies made without tax payment, as per Section 54 of the CGST Act.

Ranjit Kumar Mishra

Student

32 Points Posted on 20 April 2020

Dear Ma'am,

refund of ITC only in case of Inverted Rate of tax and export of Goods and services by paying IGST.

avove ITC only can be utilised for outward liabilities of GST.

CA RKM
9038835683

J. K. Ratan

Compliance Advisor

629 Points Posted on 20 April 2020

Agreed with Mr. Mishra

Pankaj Rawat

GST Practitioner

29904 Points Posted on 20 April 2020

No as per Section 54 you cannot claim refund on same.

Shivam RC

Student

7666 Points Posted on 20 April 2020

As per First Proviso to Sub-Section (3) of Section 54 of the CGST Act 2017, " There will be No REFUND of UNUTILISED INPUT TAX CREDIT, " except in the following cases :

(i). Zero Rated Supplies made without payment of Tax.

(ii). Incase of 'INVERTED DUTY STRUCTURE'.

Hence, you are not eligible for REFUND OF ITC as per Section 54 of the CGST Act 2017.

Regards,
Shivam RC.