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 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 ITC 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 w
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n 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, exports of goods or services or both and inter-State supplies of goods or services or both made from the State or Union territory by the said taxable person but excludes CGST, SGST, UTGST, IGST and cess. In the case where an Assessee is only engaged in supply of services outside India for which payment is received by it in later months. The amount received by assessee in a particular month is always different from the amount of invoices raised by assesse. Since assessee is only providing export s
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riod. 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 GST paid by it on inputs & input services received for providing export services, which is not the intention of law. The same is explained with the help of an example below: Value of Export invoice raised in July, 2017 – 1,00,000/- Payment received during July, 2017 – 80,000/- ITC taken in July, 2017 – 10,000/- Refund amount = 10000 x 80000 / 100000 = 8000/- In the above case, though the exporter had taken ITC equivalent to INR 10000/-, but refund amount is coming to INR 8000/-. Further, e
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1,00,000X10,000 divided by 1,00,000.Payment received by you do not have any significance for filing the refund claim. By the above calculation myour eligible refund will be Ra. 10,000/- Reply By Amit Khurana – The Reply = Dear Sir, Thank you for your reply. However, I would like to draw your attention to the definition of Turnover of Zero-Rated Supply of Services as mentioned in Rule 89(4): 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 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 re
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