GST Inverted Duty Structure Refund Calculator
When a manufacturer buys inputs at a higher GST rate than the rate on its finished goods, credit piles up in the ledger. Rule 89(5) lets you claim a refund of that accumulated credit, and this calculator applies the formula.
Your numbers
Outward value of goods where the input rate is higher than the output rate, excluding GST.
Total turnover in the state for the period, excluding exempt supplies (other than zero-rated) and the value of refunds on other grounds.
ITC availed on inputs (goods) in the same period. Input services are not included for this ground after the 2022 amendment.
Refund cannot exceed the credit actually available.
Your results
Illustrative. Refund claims are subject to Section 54, Rule 89 and the latest notifications on eligibility and goods excluded from this ground.
Maximum refund versus net ITC on inputs
Sweeps Net ITC on inputs for the period from 0 to 1200000, holding your other inputs fixed.
Prepare refund working from ERP data
Optional: ask how to extract period-wise invoices and credit for a refund claim from your ERP.
Optional. The tool and every export work without this. No spam.
How to use the calculator
Enter the turnover of the inverted supplies, the adjusted total turnover for the same period, the net ITC on inputs and the output rate. Add your credit ledger balance, since the refund cannot exceed it. The tool returns the formula maximum and the claimable amount. The chart sweeps net ITC to show how the refund grows only once credit exceeds the tax payable on the inverted supply.
The Rule 89(5) formula
Maximum refund equals the turnover of inverted rated supply multiplied by net ITC divided by adjusted total turnover, less the tax payable on that inverted supply. Net ITC is credit on inputs for the period, excluding credit already used for another refund ground. Since the 2022 changes, input services and capital goods are outside the numerator for inverted duty refunds. Some goods are also notified as ineligible, so confirm yours first.
- Refund is claimed in form RFD-01
- Claim is made for a tax period or a set of periods
- Limit of two years from the relevant date
- Check the goods against the notified exclusion list
Worked example
A manufacturer has Rs 60 lakh of inverted supply taxed at 5 percent, so Rs 3 lakh of output tax. Adjusted turnover is Rs 80 lakh and net ITC on inputs is Rs 6 lakh. The credit attributed to the inverted supply is Rs 4.5 lakh, so the formula allows Rs 1.5 lakh. With Rs 4 lakh in the ledger, the whole Rs 1.5 lakh is claimable and the rest stays as credit.
Common mistakes
People include input services in net ITC, forget that credit has to be in the ledger to be refunded, or use gross turnover that includes exempt supplies. Mismatches between GSTR-2B, GSTR-3B and the refund statement also delay processing.
- Including input services in the formula
- Using the wrong adjusted turnover
- Claiming on goods notified as excluded
- Not matching refund statements to returns
Frequently Asked Questions
What is an inverted duty structure?
It is a situation where the GST rate on inputs is higher than the rate on the finished product, so credit builds up instead of being used against output tax. Typical examples arise in textiles, footwear, fertilisers and some engineering goods.
Can I claim a refund of ITC on input services?
Under the current formula, no. The net ITC for inverted duty refund covers inputs, meaning goods, and not input services or capital goods. Those credits can still be used against output tax in normal course.
How long do I have to apply?
Two years from the relevant date, which for this ground is generally the due date for filing the return for the period in which the credit accumulated. Check the latest rules before filing.
Does the refund reduce the credit ledger?
Yes. The refund amount is debited from the electronic credit ledger at the time of filing the application, and re-credited if the claim is rejected.
Refund statements need clean ERP data on invoices and credit by period. We can help extract and reconcile them from your ERP so the RFD-01 working takes hours, not weeks.
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