Skip to content

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

For a relevant period, Konark Industries made the following supplies. Zero-rated exports of goods under LUT (value taken as per Rule 89(4)): Rs 20,00,000. Zero-rated supply of services (as per clause D): Rs 5,00,000. Domestic taxable supplies of goods: Rs 40,00,000. Other non-zero-rated supplies of services: Rs 10,00,000. There were no exempt supplies. Net ITC on inputs and input services is Rs 3,00,000. What is the maximum refund under Rule 89(4)?

The maximum refund is Rs 1,00,000. Zero-rated turnover is Rs 25,00,000 (goods plus services) and Adjusted Total Turnover is Rs 75,00,000 including services. Multiplying Net ITC of Rs 3,00,000 by 25 over 75 gives the refund.

  1. ARs 1,25,000
  2. BRs 80,000
  3. CRs 1,00,000Correct
  4. DRs 1,50,000

Explanation

Adjusted Total Turnover = goods turnover (20,00,000 + 40,00,000 = 60,00,000, excluding services) + zero-rated services 5,00,000 + other services 10,00,000 = Rs 75,00,000. Numerator = 20,00,000 + 5,00,000 = Rs 25,00,000. Refund = 25,00,000 x 3,00,000 / 75,00,000 = Rs 1,00,000. Rs 1,25,000 arises from wrongly leaving services out of the Adjusted Total Turnover (25/60), and Rs 80,000 from leaving services out of the numerator.

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