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Input Tax Credit Refund - Inverted Tax Structure

GST refund can be claimed by the taxpayer for input tax which is the central tax (CGST), state tax (SGST), integrated tax (IGST) or tax paid by a person having GST registration on the supply of goods or services. GST RFD-01A form has to be filled at GST portal by the taxpayer to claim the refund of input tax credit accumulated due to the inverted tax structure. In this article, we look at the process for making a refund on input tax credit on inverted tax structure.

Inverted Tax Structure

Inverted tax structure refers to a situation where the tax levied on inputs is higher than the tax levied on output supplies. Therefore, the higher tax paid on input supplies gets accumulated in the taxpayer Electronic Credit Ledger can be utilised at the time of obtaining a refund.

Eligibility Criteria

Under GST registration, any person having the aggregate turnover of up to Rs 1.5 crores in the previous financial year or the current financial year opting to file FORM GSTR-1 quarterly such persons can apply for a refund on a quarterly basis. Note: Refund on account of inverted tax structure is not available in case of exempted from tax or nil rated supplies.(i.e) Supply of goods or services, on which GST rate of 0% is applicable are called nil rated.

Time Limit

Refund application in form RFD-01A has to be filed by the applicant in two years from the term of the financial year in which the refund arises.

Documents Required

The applicant has to upload the required documents along with Form RFD-01A, as notified under CGST Rules or Circulars stated. Additionally, Statement 1A having details of inward and outward invoices for which the refund is to be claimed or any other supporting documentation can be uploaded by the taxpayer, if needed by the sanctioning authority. Know more about GST Refund- Documents Required.

Procedure To Claim Input Tax Credit Refund – Inverted Tax Structure

To claim for refund on the input tax credit due to the inverted tax structure, follow the steps mentioned below: Step 1: Kindly visit the official portal of GST department.

Provide Login Details

Step 2: Login to the GST Portal with accurate details like username and password and click on “Login” button. Step 3: Click the Services and select “Application for refund” option from Refund menu. [caption id="attachment_64567" align="aligncenter" width="663"]

Input Tax Credit Refund - Inverted Tax Structure- Image 1

Choose Refund Type

Step 4: Select Refund on account of ITC accumulated due to Inverted Tax Structure option from the refund type. [caption id="attachment_64568" align="aligncenter" width="653"]

Input Tax Credit Refund - Inverted Tax Structure- Image 2 Step 5: Choose the Financial Year and Tax Period for which application has to be filed from the drop-down list and click the Create button. Step 6: Select “Yes or No” option for refund made for all previous tax periods starting from registration date.

In case of Yes

Step 7: Select the Declaration checkbox and choose the name of authorised signatory in the Name of Authorized Signatory drop-down list. Step 8: Click the File with DSC or File with EVC button. [caption id="attachment_64569" align="aligncenter" width="677"]

Input Tax Credit Refund - Inverted Tax Structure- Image 3

Filing with DSC

Click the Proceed button and select the certificate and click the SIGN button.

Filing with EVC

Enter the OTP which is received to your email ID and mobile number of the Authorized Signatory and press the Verify button.

In case of No

Step 9: The Refund on account of ITC accumulated due to Inverted Tax Structure page is displayed. [caption id="attachment_64570" align="aligncenter" width="607"]

Input Tax Credit Refund - Inverted Tax Structure- Image 4

Download Offline Utility

Step 9: Click the “Download Offline Utility” link and press the “Proceed” button to continue. [caption id="attachment_64571" align="aligncenter" width="607"]

Input Tax Credit Refund - Inverted Tax Structure- Image 5 Step 10: Now open the excel sheet and enter the GSTIN and From and To Return Period in the prescribed format. Step 11: Enter the details of Sr. No., invoices of inwards supplies received, tax paid on inward supplies, invoices of outward supplies issued and tax paid on outward supplies and click the “Validate & Calculate” button. [caption id="attachment_64574" align="aligncenter" width="673"]

Input Tax Credit Refund - Inverted Tax Structure- Image 6 Step 12: The total number of records in the sheet is displayed. Click the "Ok" button. Step 13: Click the “Create File To Upload” button and save your file.

Upload invoices details for inward and outward supplies

Step 14: Click the link "Click to fill the details of invoices for inward and outward" supplies. And click the tab click here to upload. [caption id="attachment_64576" align="aligncenter" width="678"]

Input Tax Credit Refund - Inverted Tax Structure- Image 7 Step 15: Now save the refund statement file and click the “Open” button. Step 16: Click the “Download Unique Invoices” tab to view the invoices that have been uploaded successfully and click Validate statement button. Step 17: Upon statement validation, a confirmation message on the screen that the statement has been submitted successfully for validation. Click the “Back” button.

Refund of ITC Acquired Due to Inverted Tax Structure

Step 18: Enter the value in statement 1 below for the tax period for which the refund to be claimed. [caption id="attachment_64577" align="aligncenter" width="629"]

Input Tax Credit Refund - Inverted Tax Structure- Image 8 Step 19: After filing the appropriate details in the statement-1, provide the refund amount to be claimed in the table “Amount Eligible for Refund”. Step 20: You can click the hyperlink Click to view Electronic Liability Ledger to see details of Electronic Liability Ledger that displays your liabilities/ dues of Returns and other than Returns and press the Go back to refund form to return to the refund application page. [caption id="attachment_64582" align="aligncenter" width="677"]

Input Tax Credit Refund - Inverted Tax Structure- Image 9 Step 21: Select the Bank Account Number from the drop-down list, and Under section upload Supporting Documents, you can upload supporting documents and click the "Submit" button. Step 22: After the statement successfully submitted a message is displayed for confirmation and click on the "Proceed" button. Step 23: Select the name of authorised signatory in the name of the authorised signatory drop-down list. Choose the File with DSC or File with EVC button.

File With DSC- Method

Click the “Proceed” button and select the certificate and click the “Sign”

File With EVC – Method

Enter the OTP sent on email and mobile number of the Authorized Signatory registered at the GST Portal and click the Verify button.

Step 24: Application Reference Number (ARN) receipt is generated and also sent on your e-mail address and mobile phone number. Click the PDF to view the receipt. Note: Once the Application Reference Number is generated on the filing of form RFD-01A, refund application is assigned to refund processing officer for processing. The request will be processed, and refund status will be updated in the portal.