India Inverted Duty Structure GST Refund Calculator
When a manufacturer buys inputs at a higher GST rate than the rate on its finished goods, credit piles up in the electronic credit ledger. This tool estimates how much of that credit can be claimed as a cash refund.
Your numbers
Taxable value of outward supplies where the input rate is higher than the output rate.
Net ITC in the refund period on inputs used for inverted supplies. Exclude capital goods and input services.
Total turnover of the registered person in the period, adjusted for exempt and non-supply items.
Your results
Formula summary for estimation only. Refund is subject to notifications on eligible goods, time limits, supporting documents and proper officer verification.
Maximum refund vs net ITC availed
Sweeps Net ITC availed on inputs from 0 to 3000000, holding your other inputs fixed.
Automate GST refund data prep
Optional review of pulling inverted duty inputs from your ERP automatically.
Optional. The tool and every export work without this. No spam.
How to use it
Pull four numbers from your GSTR-3B, GSTR-2B and sales register for the refund period: turnover of inverted rated supplies, net ITC on inputs, adjusted total turnover and tax payable on those supplies. Enter them to get the maximum refund. Then use the chart to see how the refund grows as more input credit accumulates.
- Net ITC excludes capital goods and input services
- Use taxable values, not invoice totals with tax
- Period must match your RFD-01 application
The formula
Rule 89(5) of the CGST Rules gives: maximum refund equals turnover of inverted rated supply of goods times net ITC divided by adjusted total turnover, minus tax payable on such inverted rated supply of goods. If the result is negative the refund is nil. The calculation applies to supplies where the credit accumulation arises because input rates exceed the output rate.
Worked example
With inverted turnover of Rs 1.2 crore, net ITC of Rs 11 lakh, adjusted turnover of Rs 2 crore and tax payable of Rs 6 lakh: proportionate ITC is 1.2 x 11 / 2 = Rs 6.6 lakh. Subtracting Rs 6 lakh of tax payable leaves a maximum refund of Rs 60,000. The remaining credit stays in the ledger for future set-off.
Common mistakes and ERP notes
Including capital goods or input services in net ITC breaks the formula. Using the wrong period or mixing exempt turnover into inverted turnover also leads to rejection. In your ERP, tag purchase invoices by item and tax code so you can pull inverted-rated input credit by period. A GST consultant should confirm the notified goods list before filing.
Frequently Asked Questions
What is an inverted duty structure?
It is a situation where GST on inputs is higher than GST on the output. Input tax credit then exceeds output liability and accumulates unused, blocking working capital until a refund or future set-off.
Can I claim refund on input services?
No. Under the inverted duty refund provision the net ITC is taken on inputs only, meaning goods, and excludes input services and capital goods in the formula.
What is the time limit?
A refund application must be filed within two years from the relevant date, which for inverted duty is generally the end of the financial year in which the credit accumulated. Check current notifications.
Which form is used?
Apply online in form GST RFD-01 on the GST portal with supporting statements and invoices. The officer issues an acknowledgment, may seek clarifications, and then sanctions the refund.
We can build a read-only report from your ERP tax tables that assembles these refund inputs by month.
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