GST Refund Consultant

  The Goods and Services Tax (GST) system in India was introduced to streamline indirect taxation by unifying multiple taxes into a single framework. However, one of the structural issues that has emerged under GST is the Inverted Duty Structure (IDS). This occurs when the tax rate on inputs (raw materials or services used in production) is higher than the tax rate on the output (final product or service). This imbalance creates difficulties for businesses, especially when claiming refunds for the excess Input Tax Credit (ITC). What is Inverted Duty Structure?  In simple terms, Inverted Duty Structure in GST refers to a situation where the GST paid on inputs is more than the GST payable on outputs. For example, if a manufacturer pays 18% GST on raw materials but only charges 12% GST on the finished goods, the excess ITC accumulates. This accumulated credit cannot be fully utilized and may lead to blocked working capital. To address this issue, the GST law provides a mechanism...

The Goods and Services Tax (GST) in India was designed to streamline the indirect tax system and remove cascading taxes. While the system has brought more transparency and efficiency, certain structural inconsistencies persist. One such issue is the Inverted Duty Structure (IDS), which contrasts with what is considered a normal or ideal duty structure. Understanding the difference between Inverted Duty Structure and Normal Duty Structure is essential for businesses, tax professionals, and policymakers. In this blog, we will break down both concepts, highlight their implications, and explore how they affect manufacturing and trade. What is a Normal Duty Structure in GST? A normal duty structure occurs when the tax rate on input goods or services is equal to or lower than the tax rate on the final product or output supply. This alignment ensures that the input tax credit (ITC) is fully utilized against the output tax liability. Characteristics of a Normal Duty Structure: GST on inputs ≤ ...

Managing Input Tax Credit (ITC) efficiently under GST is essential for businesses to optimize their tax liability and cash flow. An organized ITC management system can help businesses avoid compliance issues, penalties, and errors during audits. Below are the best practices for Eligible and Ineligible Input Tax Credits under GST . 1. Implement Robust Accounting Systems Using a robust and integrated accounting system is vital for efficient ITC management. Accounting software should be capable of tracking both the purchase invoices and the corresponding GST paid. The system should also help in reconciling the details with GSTR-2B to ensure accurate claims. The integration of your accounting system with the GST portal ensures smooth flow of data and helps identify discrepancies early on. 2. Timely Reconciliation Regular reconciliation of purchase records with GSTR-2B (auto-drafted statement of inward supplies) is one of the best practices for managing ITC. GSTR-2B auto-generates the detai...

GST refunds are designed to alleviate tax burdens for businesses that have overpaid or accumulated excess input tax credit (ITC). In this post, we’ll explore the five most common scenarios where businesses can claim a GST refund . 1. Excess Input Tax Credit (ITC) Businesses often accumulate excess ITC when they pay GST on purchases but have no output tax liability to offset it. This typically happens when a business deals in zero-rated exports or exempt goods and services . Since no tax is levied on exports, businesses cannot use the credit to offset output tax, and the excess ITC becomes refundable. For example, a textile manufacturer might purchase raw materials with GST, but if the final product is exported, no output tax is payable. The manufacturer can apply for a refund of the excess ITC. 2. Exports of Goods and Services Under the GST framework, exports are zero-rated , meaning they are not subject to GST. However, exporters still pay GST on inputs used in manufacturing goods o...