We are buying polyester cotton yarn of HSN 5509 (12%) & processed in looms and made it as woven fabrics. Sold it on HSN code 5516 (5%). We are taking of ITC 12%. Is correct?.
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Quick Summary
This discussion clarifies the eligibility for Input Tax Credit (ITC) refunds when purchasing polyester cotton yarn at a higher GST rate (12%) and processing it into woven fabrics sold at a lower rate (5%). It confirms that claiming ITC is correct and explains that an accumulated ITC can be refunded under the inverted duty structure scheme due to the higher input tax rate compared to the output tax rate.