Central Board of Indirect Taxes and Customs (CBIC) has issued Circular No. 56 /2018 dated 24th August, 2018 to clarify certain doubts regarding restriction on refund of accumulated Input Tax Credit (ITC) on fabrics like cotton and silk .
The Key Points of the Circular are:
- CBIC has clarified that refund of accumulated ITC on account of inverted duty structure shall not be allowed in respect inputs utilized in such fabrics till 31st July, 2018. It does not put any restriction in relation to the ITC on input services and capital goods.
- CBIC further clarified that the accumulated ITC shall be determined by using the prescribed formula in Rule 89 (5) of the CGST Rules, 2017. The unutilized balance lying after making the payment of GST for the month of July, 2018 shall lapse.
- In case of a manufacturer having certain stock or finished goods lying in balance as on 31.7.2018, the input tax credit involved in inputs contained in such stock (including inputs lying as such) may be excluded for determination of Net ITC for the purposes of applying the formula as per Rule 89(5) of the said rules. For this purpose, the ITC relating to inputs contained in stock may be determined in the manner as provided in S. No. 7 of Form GST ITC-01.
- CBIC has further clarified that the accumulated ITC in relation to Zero rated Supplies (exports) shall not lapse, as the refund of such ITC on exports is separately determined.
- A taxable person, whose input tax credit is liable to lapse shall calculate the amount of such accumulated ITC upon self-assessment and shall furnish the details in GSTR 3B return for the month of August, 2018. The amount shall be furnished in column 4B (2) of the return [ITC amount to be reversed for any reason (others)]. Verification of accumulated ITC amount so lapsed may be done at the time of filing of first refund (on account of inverted duty structure on fabrics) by such person. Therefore, a detailed calculation sheet in respect of accumulated ITC lapsed shall be prepared by the taxable person and furnished at the time of filing of first refund claim on account of inverted duty structure.
For further clarifications please refer the attached document.
Source: Central Board of Indirect Taxes & Customs
