Question ID : 42239

GST Refund

A New Firm constituted in 2020-21 has made gst purchase of Yarn but not made any sale of finished product which is taxable at a lower rate during 2020-21.Can it claim GST refund for 2020-21

Answer ID : 81438

In the case of refund on account of inverted duty structure, refund of Input Tax Credit will be as per following formula [Rule 89(5) of CGST and SGST Rules, 2017 amended on 13-6-2018 but with retrospective effect from 1-7-2017] Maximum Refund Amount = (([Turnover of inverted rated supply of goods and services) x Net ITC]/Adjusted Total Turnover) - tax payable on such inverted rated supply of goods and services. As per the above formula, Permissible refund is based upon the turnover of inverted rated supply of goods and services. Therefore, if there is no turnover which attracts lower tax during the year/ period, you are not allowed to claim refund under the inverted duty structure.

Answer ID : 81470

I am able to under stand from the query of the querist that there is no turn over of the Company during the FY 2020-21. Any refund claim of duty is based on the turnover during the financial year. As there is no turnover during the year. Hence no refund can be claimed.

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