Goods and Services Tax

Unutilized Input Tax Credit in case of Exports of services without payment of IGST

Goods and Services Tax – GST – By: – Pooja Sheth – Dated:- 18-7-2018 – Introduction: Exports has always been considered as apple of GST s eye. It has always been considered the area of focus whenever any government policy has to be framed. Hence, person exporting should not be burdened by domestic taxes. Section 16 of IGST Act, 2017 deals with the concept of Zero rated supply. According to this provision zero rated supply means export of goods or services or both or supplying goods or services or both to a Special Economic Zone unit. The concept of export of services has been broadly borrowed from the provisions of the erstwhile Service Tax Law. Under the GST regime, export of service will be treated as zero-rated supplies . Section 2(6) of IGST Act, 2017 defines the term export of services as under: – Export of services means the supply of any service when, – The supplier of service is located in India; The recipient of service is located outside India; The place of supply of service

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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 Services x Net ITC Adjusted Total Turnover Refund amount means the maximum refund that is admissible; Net ITC means the 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 rule (4A) or (4B) or both; Turnover of Zero rated supply of services means value of Payment received during the period for the invoices raised in earlier period or invoices raised in current period Add: Invoices raised in current period for advances received in earlier period Less: Advances received in current period whose supply is not completed in the current period Adjusted Total Turnover means the turnover in a state or a union territory, as defined under clause (112) of section 2, excluding – The value of exempt supplies other than zero rated supplies and The tur

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otal turnover (e) = a + b Net ITC (CGST+ SGST+ IGST) (f) Eligible Refund Amount (g)=d*f/e July 200 700 700 700 900 180 140 Aug 300 800 1000 800 1100 220 160 Sept 250 750 600 750 1000 200 150 Oct 200 700 1200 700 900 180 140 Nov 250 750 – 550 1000 200 110 Dec 100 800 1000 1000 900 180* 200 Total 1400 4500 4500 1160 900 *Refer eligible refund amount note below Clarification of above working: – Turnover of Zero Rated Supply of Services July: All the payments have been received against the invoices raised in the month of July itself and hence payment received during the month will be considered as turnover of Zero rated supply of services. August: We have received ₹ 1000 lakhs against which invoices raised are only for ₹ 800 lakhs. Invoices amounting to ₹ 200 lakhs has not been raised in the current period. Hence applying the above formula turnover of zero rated supply will be 1000+0-200=800 lakhs Rs September: We have received ₹ 600 lakhs against which invoices ra

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-0=1000 lakhs Rs. Adjusted Total Turnover Adjusted total turnover in GST has to be considered as defined under clause (112) of section 2 which is sum total of domestic as well as zero rated supplies and excludes taxes and exempt supplies. Zero rated supply here has to be considered as defined under clause (112) of section 2 which is invoice raised. Here it slightly differs from erstwhile service Tax law. Net Input Tax Credit As per Definition of Input Tax which is defined under clause (62) of section 2 of CGST Act, 2017 includes all the three taxes that is integrated tax, central tax and state tax hence calculation has to be done on aggregate basis and not on individual basis. Eligible Refund Amount *In the month of December, zero rated turnover exceeds adjusted total turnover. Hence, on the GST portal one will not be able to enter zero rated turnover greater than adjusted turnover. Hence entire amount of Net ITC will be eligible amount of refund. One cannot claim refund amount exceedi

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. After completing the above steps form GST RFD – 01A is to be filed on common portal by attaching DSC On successful submission Acknowledgement will be generated. Documents required for filing Refund Application List of documents required for submission of manual refund application: Copy of Form GST RFD – 01A filed on common portal and acknowledgement generated. Electronic credit ledger copy with the amount of refund debited Copy of filed GSTR 3B Copy of filed GSTR 1 Copy of Export Invoices Copy of Statement 3 of FORM RFD-01A. Invoices w.r.t. input and input services. BRC or FIRC for export of services. Undertaking in FORM RFD-01A. Cancelled Cheque Various forms under Refund: – Time Limit GST RFD 01 Application for Refund 2 years from the relevant date GST RFD 01A Application for Refund (Manual) 2 years from the relevant date GST RFD 02 Within 15 days from filing application GST RFD 03 Deficiency memo Within 15 days from filing of GST RFD-01A, if any GST RFD 04 Provisional Refund Order

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