Skip to content

CMA Final · Indirect Tax Laws and Practice · GST Refunds - Inverted Duty Structure and Zero Rated Supplies

A manufacturer exports goods under a letter of undertaking. For the relevant period: lower of FOB and invoice value of exports Rs 60,00,000 (below 1.5 times the value of like domestic goods); domestic taxable turnover of goods Rs 1,40,00,000; no services and no exempt supplies. Net ITC on inputs and input services is Rs 8,00,000. What is the maximum refund?

The maximum refund is Rs 2,40,000. It is zero-rated turnover of Rs 60 lakh multiplied by net ITC of Rs 8 lakh, divided by adjusted total turnover of Rs 2 crore, which includes both export and domestic turnover.

  1. ARs 2,40,000Correct
  2. BRs 3,00,000
  3. CRs 8,00,000
  4. DRs 1,60,000

Explanation

Adjusted total turnover = 60,00,000 + 1,40,00,000 = Rs 2,00,00,000. Refund = 60,00,000 x 8,00,000 / 2,00,00,000 = Rs 2,40,000. Using only domestic turnover as the denominator (1,40,00,000) would be wrong, since the zero-rated turnover is part of adjusted total turnover.

Did you get it right without looking?

One question tells you little. A timed set on GST Refunds - Inverted Duty Structure and Zero Rated Supplies shows your real accuracy, how long you take and where you lose marks.

Practise GST Refunds - Inverted Duty Structure and Zero Rated SuppliesFree diagnostic mock

More GST Refunds - Inverted Duty Structure and Zero Rated Supplies questions