Unutilized Input Tax Credit in case of Exports of services without payment of IGST
By: – Pooja Sheth
Goods and Services Tax – GST
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
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x under bond or letter of undertaking in accordance with the provisions of sub section (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 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”
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Month
Domestic Turnover (Invoices Raised) (a)
Export Turnover (Invoices Raised) (b)
Payment received in Foreign Currency equivalent INR (c)
Turnover of Zero-Rated supply of Services (d)
Adjusted Total 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
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n earlier month are ₹ 550 lakhs. Hence applying the above formula turnover of zero rated supply will be 0+550-0=550 lakhs Rs
* December: We have received ₹ 1000 lakhs against invoices of ₹ 800 crores. Hence applying the above formula turnover of zero rated supply will be 1000+0-0=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.
*
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information so filled by clicking the option "Validate & Calculate"
* After successful validation creating JSON file by clicking the option "Create File to Upload".
* Uploading the JSON File so created in the form GST RFD – 01A on common portal.
* Submitting the statement uploaded.
* Select the bank account number where refund is to be credited.
* 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
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Furnishing of Bond or Letter of Undertaking for export of goods or services
Prior to the export
Other Clarifications
* Debit entry shall be made in electronic credit ledger at the time of filing a refund application
* Acknowledgement in Form GST RFD 02 will be issued if the application is found complete in all respect
* Bank Account details should be as per the registration data. Any change in Bank details shall first be amended in registration particulars before quoting in the application
* BRC or FIRC details will be mandatory where refund is claimed against export of services.
* The minimum amount of refund payable should be ₹ 1000/- or more then only application has to be done.
* Provisional refund of 90% shall be granted within 7 days from the date of RFD – 02
* 6% interest can be claimed if the RFD-06 has not been received within 60 days from the date of receipt of GST RFD – 01A
Reply By ATK 49 as =
In your example you have clamied ITC on a monthly basis
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