Skip to content

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

A registered exporter claims refund of unutilised ITC for a period on zero-rated supply of goods made without payment of tax under bond. Zero-rated goods were invoiced at ₹60,00,000 with FOB value in the shipping bills of ₹58,00,000. Like goods domestically supplied by the same supplier would be valued at ₹36,00,000 for these quantities. Per Rule 89(4), what is the turnover of zero-rated supply of goods to be used in the formula?

The turnover is ₹54,00,000. The export value is the lower of FOB and invoice value, which is ₹58,00,000, but the rule caps it at 1.5 times the value of like goods domestically supplied, which is ₹54,00,000, and the lesser figure is taken.

  1. A₹60,00,000
  2. B₹58,00,000
  3. C₹54,00,000Correct
  4. D₹36,00,000

Explanation

Value of goods exported is the lower of FOB value (₹58,00,000) and invoice value (₹60,00,000) = ₹58,00,000. The turnover is the lesser of this and 1.5 times the value of like goods domestically supplied: 1.5 × 36,00,000 = ₹54,00,000. The lower is ₹54,00,000. Using ₹58,00,000 ignores the 1.5 times cap.

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