The government has estimated that, annually, it has to shell out nearly ₹20,000 crore as refund on account of inverted duty structure (IDS).
IDS is an arrangement for manufactured items where raw materials have higher duty, while finished product attracts lower duty. Such imbalanced tax structure results into accumulation of tax credits (input tax credit or ITC) in the hands of the tax payers.
Under the GST regime, a registered taxpayer can claim a refund of unutilised ITC at the end of any tax period, where the credit has accumulated on account of rate of tax on inputs being higher than that on output supplies. In a note prepared for 38th GST Council meeting, it has been said that manufactured goods in lower rate slabs (5 per cent or 12 per cent) suffer IDS, which has led to demand for refund ITC on services and capital goods. This has also led to litigations and distortions.
This story is from the December 25, 2019 edition of The Hindu Business Line.
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This story is from the December 25, 2019 edition of The Hindu Business Line.
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