Clarification on Refund of Unutilized Input Tax Credit for Exporters of Fabrics
<p><span>The Government of India has issued clarifications regarding the refund of unutilized input tax credit (ITC) of GST paid on inputs for exporters of fabrics. Here are the main points from Circular No. 18/18/2017-GST:</span></p><ol start="1"><li><span><strong>Refund Eligibility for Manufacturer Exporters</strong>:</span><ul><li><span>Manufacturer exporters of fabrics under chapters 50 to 55 and 60 and headings 5608, 5801, and 5806 can claim a refund of unutilized ITC of GST paid on inputs (excluding capital goods) used in the manufacture of fabrics.</span></li></ul></li><li><span><strong>Zero Rated Supplies Exemption</strong>:</span><ul><li><span>The restriction on refund of unutilized ITC as per Notification No. 5/2017-Central Tax (Rate) does not apply to zero rated supplies. This includes: a. Exports of goods or services. b. Supplies to a Special Economic Zone (SEZ) developer or unit.</span></li></ul></li><li><span><strong>Accumulation Due to Higher Input Tax Rates</strong>:</span><ul><li><span>The refund of unutilized ITC is applicable where the tax rate on inputs is higher than the tax rate on output supplies, provided the output supplies are not nil rated or fully exempt.</span></li></ul></li><li><span><strong>Compliance with Section 54 of CGST Act</strong>:</span><ul><li><span>The clarifications are aligned with the provisions under Section 54 of the CGST Act, 2017, specifically addressing the conditions for claiming refunds on unutilized ITC.</span> <a href="https://cms.plasament.com/storage/circularno-18-cgst.pdf">circularno-18-cgst</a><br> </li></ul></li></ol>