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GST ITC Refund:
Unlock Your Blocked Working Capital.

Is your GST input credit piling up while your cash flow gets squeezed? If your GST on purchases exceeds your output tax, you may be entitled to a cash refund. We help you unlock your blocked ITC so your business stays liquid and compliant.

Claim Your ITC Refund Now
Inverted Duty Refunds Zero-Rated Supply Claims Improved Cash Flow
Eligibility & Rules

Who Can Claim a Refund & What's Eligible?

The refund of unutilized ITC is primarily available in two specific business scenarios, and strict rules apply to what credits can be claimed.

Primary Scenarios for Refund

You can claim a refund if your business falls into one of these categories.

  • Inverted Duty Structure: The GST rate on your inputs (purchases) is higher than the GST rate on your final products (sales).
  • Zero-Rated Supplies: You make supplies without IGST payment under a Letter of Undertaking (LUT) or Bond, such as exports or supplies to SEZ units.

Eligible vs. Ineligible ITC

Not all accumulated ITC is refundable. Here's what you need to know.

  • Eligible: ITC on inputs and input services are generally eligible for refund.
  • Not Eligible (Capital Goods): ITC on capital goods cannot be claimed as a refund under the inverted duty structure.
  • Not Eligible (Blocked Credit): ITC blocked under Section 17(5) (e.g., motor vehicles, personal use) is not refundable.
  • Not Eligible (Exempt Supply): No refund if your final output supply is nil-rated or exempt.
The Technical Side

The Refund Formula & Common Pitfalls

Understanding the calculation is key to claiming the correct amount and avoiding common errors.

Refund Calculation (Inverted Duty)

The GST law provides a specific formula to determine the eligible refund amount.

Formula:

$$ \text{Refund} = \left[ \frac{\text{Turnover of Inverted Supply} \times \text{Net ITC}}{\text{Adjusted Total Turnover}} \right] - \text{Tax Payable on Inverted Supply} $$

Example Calculation:

  • Turnover of Inverted Supply: ₹10,00,000
  • Net ITC (Inputs): ₹1,80,000
  • Adjusted Total Turnover: ₹20,00,000
  • Output Tax Paid: ₹50,000
  • Proportionate ITC: (10L × 1.8L) / 20L = ₹90,000
  • Eligible Refund: ₹90,000 - ₹50,000 = ₹40,000

Common Pitfalls & Solutions

Avoid these common mistakes to ensure your refund is processed smoothly.

  • Claiming Blocked Credits: Scrutinize all purchases to exclude items listed under Section 17(5).
  • Data Mismatches: Ensure GSTR-1, GSTR-3B, and GSTR-2A/2B data reconciles perfectly before filing.
  • Including Capital Goods: Remember, ITC on capital goods is not eligible for refund in inverted duty cases.
  • Late Applications: File your refund claim within 2 years from the relevant date to avoid rejection.
Step-by-Step

How to Claim Your Unutilized ITC Refund

Follow this compliant and systematic path to file your claim on the GST portal.

1

File Form GST RFD-01

Log in to the GST portal and file the application for the relevant tax period.

2

Attach Documents

Upload necessary documents like invoices, working sheets, and required declarations.

3

Ensure Returns are Filed

Confirm that your GSTR-1 and GSTR-3B for the period are filed and data matches.

4

Monitor & Respond

Track the refund status and promptly respond to any queries from the department.

Don’t Let Capital Get Stuck!

Want Fast, Error-Free ITC Refunds?

Krystal7 will audit your credits, ensure full compliance, and follow up with GST officers—freeing up your business cash for growth.

Accurate Calculation
Error-Free Filing

Full Documentation
Query-Proof

Dept. Follow-up
Faster Processing

Book your free ITC refund review today!

Questions Answered

Frequently Asked Questions

Your questions about GST ITC refunds, answered for 2025.

No, under the inverted duty structure, refund is restricted to ITC on inputs and eligible input services. ITC on capital goods is not refundable.

You must file the refund claim within 2 years from the "relevant date," which is typically the due date for filing the GSTR-3B return for the period in which the refund arises.

No, a refund of unutilized ITC is not permitted if the final goods or services you supply are exempt or have a nil rate of tax.

As per current notifications, the refund under an inverted duty structure is generally restricted to the ITC availed on inputs (goods) only. ITC on input services is not included in the 'Net ITC' for the formula.

Any credit that is blocked or ineligible as per Section 17(5) of the CGST Act (e.g., for motor vehicles, food and beverages, etc.) cannot be part of your ITC accumulation and is not eligible for refund.