which amount to be claimed as refund for accumulated ITC in case of export under LUT, Goods and Services Tax - GST

[BalKrishan Rakheja]

One party is engaged in manufacturing and clearing the goods on payment of duty in DTA and under LUT for export. The party claimed refund of accumulated ITC for the tax period of July 2017 amounting to ₹ 1.62 Crores on 05.01.2018 after making debit entry of the amount claimed as refund. The party also made some more debit entry in the same month for refund claimed for the month of August and September also. Now the detail of the amount remained in the electronic credit ledger is as under:

1. Balance as on 31.01.2018 in the credit ledger after debiting the duty for the month of Decmber 2017 and debit entry made for three refunds is = ₹ 50 lacs only

2. Balance for the month of July after taking credit and debiting the duty (Tax period for which refund claimed) = ₹ 20 Lacs.

3. Refund amount claimed as per formula ₹ 1.62 crores.

I want to know which amount he is eligible for refund. In my view he is eligible for the amount mentioned in the Sr. No. 2 as per the sub section (3) of Section 54. Please give your valuable advise.

Posts / Replies

[Rajagopalan Ranganathan]

Sir

According to rule 89 (4) of CGST Rules, 2017,

In the case of zero-rated supply of goods or services or both without payment of tax under bond or letter of undertaking in accordance with the provisions of subsection (3) of section 16 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), refund of input tax credit shall be granted as per the following formula –

Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) x Net ITC ÷Adjusted Total Turnover

Where, -

(A) "Refund amount" means the maximum refund that is admissible;

(B) "Net ITC" means input tax credit availed on inputs and input services during the relevant period other than the input tax credit availed for which refund is claimed under sub-rules (4A) or (4B) or both;

(C) "Turnover of zero-rated supply of goods" means the value of zero-rated supply of goods made during the relevant period without payment of tax under bond or letter of undertaking, other than the turnover of supplies in respect of which refund is claimed under sub-rules (4A) or (4B) or both;

(D) "Turnover of zero-rated supply of services" means the value of zero-rated supply of services made without payment of tax under bond or letter of undertaking, calculated in the following manner, namely:-

Zero-rated supply of services is the aggregate of the payments received during the relevant period for zero-rated supply of services and zero-rated supply of services where supply has been completed for which payment had been received in advance in any period prior to the relevant period reduced by advances received for zero-rated supply of services for which the supply of services has not been completed during the relevant period;

(E) "Adjusted Total turnover" means the turnover in a State or a Union territory, as defined under clause (112) of section 2, excluding –

(a) the value of exempt supplies other than zero-rated supplies and

(b) the turnover of supplies in respect of which refund is claimed under subrules (4A) or (4B) or both, if any, during the relevant period;

(F) “Relevant period” means the period for which the claim has been filed.

The refund of input tax credit will be granted by the Department as per the above rule.

[BalKrishan Rakheja]

Thanks for your reply sir,

But my query is still unanswered. From the above formula maximum amount of refund can be calcuated and not eligible amount of refund. My querry is that which amount from the three as mentioned in my query is admissible as refund to the party. for the sake of say when the accumulated ITC for the period (Tax period) for which refund claimed is less than the refund claimed then how he can claim for refund of that amount which was not accumulated as ITC. for example accumulated ITC for the relevant period is ₹ 100000/- and he filed refund as per formula (maximum refund amount) for ₹ 1.5 Lacs. My question is which amount is elgible to him claimed as refund of accumulated I

[Harshal Fifadra]

The refund application is allowed to be filed for lower of following:

1. Refund as per the formula

2. ITC claimed in GSTR-3B

3. Balance amount in ITC ledger

[BalKrishan Rakheja]

Thanks Harshal ji for your valuable opinion.

Please clarify for which period the credit ledger's balance is to be claimed as refund .

(1) Credit ledger balance of July 17 (Rs. 20 lacs) for which the refund pertains as the export was done in July 17 and ITC was also availed in July 2017 or

(2) credit ledger balance (Rs 50 Lacs) available on the day of filing the refund claim. I filed the refund claim of July month in the month of Jan 18.

Please clarify