Inverted Duty Structure Refund
Refund of accumulated input tax credit where the GST rate on your inputs is higher than the rate on your output supplies.
An inverted duty structure refund arises where the GST rate paid on inputs is higher than the GST rate charged on the corresponding output supply, resulting in accumulated input tax credit that cannot be fully utilised against output tax liability, and this accumulated credit can be claimed as a refund subject to the prescribed formula and exclusions.
What our inverted duty refund service covers
Identifying eligibility, computing the refund correctly, and taking the claim through to sanction.
- Identifying whether your input and output tax rates create an inversion
- Computing accumulated ITC eligible for refund under the prescribed formula
- Excluding ineligible credit such as on capital goods and services from the claim
- Compiling purchase and sales invoices supporting the computation
- Filing the refund application (RFD-01) on the GST portal
- Handling deficiency memos and department queries during processing
What determines an inverted duty refund
The specific factors that go into establishing and computing the claim.
Rate Comparison
Comparing the GST rate on inputs against the rate on output supplies to confirm an inversion exists.
Refund Formula
Applying the prescribed formula linking turnover of inverted-rated supply, net ITC and adjusted total turnover.
Exclusions
Excluding credit on capital goods and input services, which are not eligible for this specific refund category.
Supporting Invoices
Compiling input and output invoices for the period that support the computed refund amount.
Our process
From initial consultation to completion.
Inversion Identification
Reviewing input and output tax rates across your supply chain to confirm an inverted duty position exists.
Refund Computation
Applying the prescribed formula to arrive at the eligible refund amount for the period.
Document Compilation
Gathering purchase and sales invoices and other records supporting the computation.
Filing & Follow-Up
Filing the refund application and tracking it through department verification to sanction.
Why inverted duty refund claims are frequently disputed
What sets our approach apart.
The formula is easy to misapply
Incorrect treatment of exempt supplies or nil-rated turnover in the formula is a common source of computation errors.
Capital goods credit is often wrongly included
Credit on capital goods must be excluded from this refund category, and including it by mistake leads to rejection of that portion.
Notifications can restrict specific goods
Certain goods have been excluded from claiming this refund by specific notification, so eligibility needs to be checked product-wise.
Inverted duty structure refund questions answered
What people ask before engaging us.
Accumulating credit due to an inverted duty structure?
We'll compute your eligible refund and file the claim correctly.
