Indirect Tax Laws (GST & Customs)MCQQuestion 5843 of 504
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Under Rule 89(5) of the CGST Rules, 2017, for computing the maximum refund amount under the Inverted Duty Structure, which of the following Input Tax Credits is included in 'Net ITC'?

Select Your Answer (Keyboard: A, B, C, D)
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Correct Answer

✅ Option B — ITC availed on inputs only

All Options:

  • AITC availed on inputs and input services
  • BITC availed on inputs only ✓
  • CITC availed on inputs, input services, and capital goods
  • DITC availed on inputs and capital goods only

Detailed Solution & Explanation

Statutory Rule 89(5) of CGST Rules, 2017:
1. The formula for Maximum Refund under Inverted Duty Structure is:
Max Refund=(Turnover of Inverted Rated SupplyAdjusted Total Turnover×Net ITC)−Tax Payable on Inverted Supply×(Net ITCITC on Inputs and Input Services)\displaystyle \text{Max Refund} = \left( Turnover of Inverted Rated SupplyAdjusted Total Turnover\displaystyle \frac{\text{Turnover of Inverted Rated Supply}}{\text{Adjusted Total Turnover}} ×\displaystyle \times Net ITC\displaystyle \text{Net ITC} \right) - Tax Payable on Inverted Supply\displaystyle \text{Tax Payable on Inverted Supply} ×\displaystyle \times \left( Net ITCITC on Inputs and Input Services\displaystyle \frac{\text{Net ITC}}{\text{ITC on Inputs and Input Services}} \right)
2. In this formula, **'Net ITC'** is strictly defined as input tax credit availed on **inputs only**.
3. Input Tax Credit on input services and capital goods cannot be included in 'Net ITC' for refund under Section 54(3)(ii).
Hence, **Option B** is the correct answer.

More Questions from Indirect Tax Laws (GST & Customs)

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