# GST Inverted Duty Structure Refund Calculator (Rule 89(5)) > Source: https://netray.co/tools/gst-inverted-duty-refund-calculator-india > Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems. > Section: Free Tools ## Short answer Estimate the maximum refund of unutilised ITC when the tax rate on inputs is higher than the rate on outputs. ## Category regional ## Region India ## Audience - Tax manager - Finance controller - Manufacturing CFO ## Tool **Kind:** calculator **Currency:** Rs **Inputs:** #### Turnover of inverted rated supplies **Key:** inv_turnover **Type:** number **Default:** 12000000 **Min:** 0 **Step:** 100000 **Unit:** Rs **Help:** Value of outward supplies on which the tax rate is lower than the rate on inputs. #### Adjusted total turnover **Key:** adj_turnover **Type:** number **Default:** 15000000 **Min:** 0 **Step:** 100000 **Unit:** Rs **Help:** Total turnover excluding exempt supplies and supplies on which no refund is claimed, for the same period. #### Net ITC on inputs **Key:** net_itc **Type:** number **Default:** 1100000 **Min:** 0 **Step:** 10000 **Unit:** Rs **Help:** ITC availed on inputs during the refund period. Services and capital goods are excluded from this figure for goods. #### ITC availed on inputs and input services **Key:** itc_all **Type:** number **Default:** 1250000 **Min:** 0 **Step:** 10000 **Unit:** Rs **Help:** Total ITC on inputs and input services in the period. #### Tax payable on inverted rated supply **Key:** tax_payable **Type:** number **Default:** 600000 **Min:** 0 **Step:** 10000 **Unit:** Rs **Help:** Output tax on the inverted rated supplies, in cash or through ITC. #### Balance ITC in electronic credit ledger **Key:** balance **Type:** number **Default:** 520000 **Min:** 0 **Step:** 10000 **Unit:** Rs **Help:** Refund cannot exceed the balance available at the end of the tax period. **Outputs:** #### Turnover-weighted ITC **Key:** part1 **Expr:** if(gt(adj_turnover,0), inv_turnover * net_itc / adj_turnover, 0) **Format:** currency **Description:** First term of the Rule 89(5) formula. #### ITC attributable to output tax **Key:** part2 **Expr:** if(gt(itc_all,0), tax_payable * net_itc / itc_all, 0) **Format:** currency **Description:** Second term: tax payable on inverted supply multiplied by Net ITC over ITC availed. #### Formula refund **Key:** formula_refund **Expr:** max(part1 - part2, 0) **Format:** currency #### Maximum refund claimable **Key:** refund **Expr:** min(formula_refund, balance) **Format:** currency **Primary:** true **Description:** Limited to the balance in the electronic credit ledger. #### ITC not refundable **Key:** stuck **Expr:** max(balance - refund, 0) **Format:** currency **Description:** Balance that stays in the ledger for adjustment against future output tax. #### Refund as share of ledger balance **Key:** refund_pct **Expr:** if(gt(balance,0), refund / balance * 100, 0) **Format:** percent **Chart:** #### Maximum refund vs inverted rated turnover **Type:** line **X:** inv_turnover **From:** 0 **To:** 15000000 **Steps:** 30 **Series:** - refund **Disclaimer:** Educational estimate of the Rule 89(5) formula. Eligibility, the definition of Net ITC, the exclusion of services and capital goods for goods suppliers, and the period for claiming are set by law and notifications. Have your tax adviser verify before filing Form RFD-01. ## Content **Intro:** An inverted duty structure arises when you pay a higher GST rate on inputs than you charge on finished goods, so credit piles up in the ledger. Section 54(3) allows a refund of that unutilised ITC, and Rule 89(5) gives the formula. This calculator applies it. **Sections:** #### How to use the calculator **Body:** Enter the turnover of inverted rated supplies, adjusted total turnover, and the ITC figures for the refund period. Add the tax payable on the inverted supply and the ledger balance. The calculator applies the formula and caps the result at the ledger balance. Use the chart to see how refund changes as inverted turnover rises, which helps when planning the claim period. **Bullets:** - Use the same tax period for every figure. - Net ITC means ITC on inputs only for supplies of goods, not services or capital goods. - Claims must be filed within two years from the end of the relevant period. #### The formula **Body:** Maximum refund equals the turnover of inverted rated supply multiplied by Net ITC and divided by adjusted total turnover, minus the tax payable on such inverted rated supply multiplied by Net ITC divided by the ITC availed on inputs and input services. The first term apportions credit to the inverted share of turnover. The second removes the credit that is already used to pay output tax on those same supplies, so only the excess is refundable. #### Worked example and common mistakes **Body:** With the defaults, the first term is Rs 880,000 and the second is Rs 528,000, giving a formula refund of Rs 352,000, which is below the ledger balance so the full figure is claimable. Common mistakes are including exempt turnover in adjusted turnover, using the wrong period, and including ITC on services in Net ITC for goods. Where the numbers differ from your portal statement, check the invoice level data before filing. **Bullets:** - Counting credit notes in the wrong period. - Ignoring that goods covered by a notified exclusion list are not eligible. - Claiming after the two year window. **Cta:** If inverted duty credit is tying up cash, we can help you extract the period data you need from your ERP for the claim. **Faq:** #### Who can claim an inverted duty refund? **Answer:** A registered person whose ITC accumulates because the rate on inputs is higher than on outputs. Some goods and services are excluded by notification, so check that your product is not in the restricted list before preparing the claim. #### What is Net ITC in the formula? **Answer:** For supplies of goods it is the ITC availed on inputs during the period, excluding input services and capital goods. For supplies of services, ITC on input services also counts. Always apply the current definition in Rule 89(4) and Rule 89(5). #### Is the refund paid in cash? **Answer:** Yes, the refund is sanctioned in the bank account after scrutiny, typically in form RFD-06 and payment advice RFD-05. It can be provisional in some zero rated cases but not for inverted duty claims. #### Can I carry forward the unrefunded balance? **Answer:** Yes. Any ITC not claimed as refund stays in the electronic credit ledger and can be used to pay output tax in later periods. Planning the claim period can therefore improve cash flow. ## Search terms inverted duty refund calculator, GST refund formula rule 89(5), inverted duty structure refund, GST refund of accumulated ITC, RFD-01 inverted duty working, maximum refund inverted rated supply, GST inverted duty manufacturer --- Talk to an engineer: https://netray.co/contact?intent=erp_ai | Machine catalog: https://netray.co/agent/catalog.json