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What is Inverted Duty Structure and Information on GST Refund Inverted Duty Structure?

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Ishita Ramani Ishita Ramani
Answered on April 27,2022

Inverted Duty Structure

 

When import tariffs on input products are greater than on completed goods, an inverted duty structure emerges. In other words when the GST rate on purchases is higher than the GST rate on sales at that time Invert Duty Structure comes into the picture. Inverted Duty Structure is also termed Inverted Tax Structure.

Information on GST Refund Inverted Duty Structure

 

Unused Input Tax Credit (ITC) may be refunded to a registered individual. The ITC for inverted tax structures can be claimed at the conclusion of any tax period in which the credit has accrued as a result of the input tax rate being higher than the output tax rate. A tax period is a period for which a return must be filed.

The following are examples of situations when a refund of an un-utilized input tax credit cannot be claimed:

  • If items exported from India are subject to export tariffs.
  • Except for the supply of goods or services or both that may be notified by the government based on the GST Council’s recommendations, output supplies are nil rated or entirely exempt.
  • If a supplier requests a refund of IGST-paid output tax.
  • If the supplier receives a duty drawback or IGST refund on these supplies.
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