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Refund of ITC u/r 89(4) of the CGST Rules, 2017

Goods and Services Tax - Started By: - Amit Khurana - Dated:- 2-7-2018 Last Replied Date:- 3-7-2018 - Dear Members, As per Rule 89(4) of Central Goods and Services Tax Rules, 2017 (CGST Rules), refund of Input Tax Credit (ITC) shall be granted as per following formula, in case of zero-rated supply of services without payment of IGST under bond or letter of undertaking (LUT) in accordance with Section 16(3) of the Integrated Goods and Services Tax Act, 2017 (IGST Act): Refund Amount = (Turnover o .....

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thout payment of tax under bond or LUT, 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 LUT, 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 se .....

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respect of which refund is claimed under sub-rules (4A) or (4B) or both, if any, during the relevant period; (F) Relevant period means the period for which the claim has been filed. As per Section 2(112) of CGST Act, turnover in State or turnover in Union territory means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis) and exempt supplies made within a State or Union territory by a taxable person, ex .....

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rvices, refund amount for assessee shall be calculated in the following manner: Refund Amount = Net ITC x (Turnover of zero-rated supply of services) ÷ Adjusted Total Turnover Here it is pertinent to note that Adjusted Total Turnover i.e. turnover in a state {Section 2(112) of CGST Act} is required to be taken in the denominator for calculating the refund amount. Adjusted total turnover means the aggregate value of all taxable supplies, intra-state exempt supplies, exports of goods or ser .....

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iod. It may be noted that taking the value of invoice raised for export services might give absurd & unintended results, in case of assessees where the amount received is less than value of invoice raised during any tax period, as its refund would get restricted to the extent of payment received. The said assessee would not be able to claim the said refund amount in any future tax periods. Thus, the assessee who is an 100% Export Oriented Undertaking would not be able to claim 100% refund of .....

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porter cannot claim refund of balance amount of INR 2000/- in any future tax period as the maximum refund amount is restricted to ITC claimed during the tax period for which refund is filed. Thus, INR 2000/- would become a cost for the said exporter. In my view, the above is not the intention of the law. The amount of payment received for zero-rated supply of services during the relevant period shall only be considered for calculating the adjusted total turnover. This interpretation would be in .....

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