{"id":60889,"date":"2025-08-27T12:06:22","date_gmt":"2025-08-27T06:36:22","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=60889"},"modified":"2025-08-28T13:32:34","modified_gmt":"2025-08-28T08:02:34","slug":"inverted-duty-structure-under-gst","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/inverted-duty-structure-under-gst\/","title":{"rendered":"Inverted Duty Structure under GST"},"content":{"rendered":"<h2><b>Inverted Duty Structure under GST Latest News<\/b><\/h2>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Tax experts have broadly welcomed the Centre\u2019s proposal for a two-tier GST rate structure while cautioning that critical issues such as inverted duty structure need to be addressed for the reform to be fully effective.<\/span><\/p>\n<h2><b>About Inverted Duty Structure under GST<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">An inverted duty structure in GST <\/span><b>occurs when the tax rate on inputs exceeds the tax rate on output.\u00a0<\/b><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">For example, in the textile industry, the input tax rate ranges from 12 to 18%, while most finished products are taxed at 5%.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This implies that <\/span><b>sellers have fewer options for offsetting the cost of input taxes.<\/b><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This situation might <\/span><b>result in an accumulation of input tax credit (ITC),<\/b><span style=\"font-weight: 400;\"> which <\/span><b>can\u2019t be used for the output tax liability.\u00a0<\/b><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The <\/span><b>accumulation of ITC <\/b><span style=\"font-weight: 400;\">due to unutilized ITC will<\/span><b> have to be carried over to the next financial year<\/b> <b>until it can be utilized <\/b><span style=\"font-weight: 400;\">by the registered taxpayer <\/span><b>for payment of output tax liability.\u00a0<\/b><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This can<\/span><b> result in higher tax costs for businesses<\/b><span style=\"font-weight: 400;\"> and\/or an <\/span><b>increase in the hidden tax cost for consumers.\u00a0<\/b><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><b>To solve this issue<\/b><span style=\"font-weight: 400;\">, the <\/span><b>GST law allows for a refund or reversal of ITC.\u00a0<\/b><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The refund is <\/span><b>determined using a method including the turnover of the inverted rated supply, the net ITC,<\/b><span style=\"font-weight: 400;\"> and the <\/span><b>overall turnover.<\/b><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><b>Exceptions where the refund<\/b><span style=\"font-weight: 400;\"> of the unutilised input tax credit<\/span><b> cannot be claimed<\/b><span style=\"font-weight: 400;\">, are as follows:<\/span>\n<ul>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><b>Output supplies are nil-rated or fully exempt supplies <\/b><span style=\"font-weight: 400;\">except for supplies of goods or services or both as may be notified by the Government on the recommendations of the GST Council.<\/span><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">If the<\/span><b> goods exported <\/b><span style=\"font-weight: 400;\">out of India<\/span><b> are subject to export duty.<\/b><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><b>If the supplier claims a refund of output tax paid under the IGST Act.<\/b><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><b>If the supplier avails duty drawback or refund of IGST on such supplies.<\/b><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><b>Source<\/b><span style=\"font-weight: 400;\">: <\/span><a href=\"https:\/\/www.thehindubusinessline.com\/economy\/tax-experts-welcome-proposed-two-tier-gst-but-caution-on-inverted-duty-structure\/article69960201.ece\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">HBL<\/span><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>An inverted duty structure in GST occurs when the tax rate on inputs exceeds the tax rate on output. Read more about Inverted Duty Structure under GST, Meaning, Cause, Impact, Latest News<\/p>\n","protected":false},"author":23,"featured_media":60933,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[2356,21,22,23],"class_list":{"0":"post-60889","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"tag-inverted-duty-structure","9":"tag-prelims-pointers","10":"tag-upsc-current-affairs","11":"tag-upsc-prelims-current-affairs","12":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/60889","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/23"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=60889"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/60889\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/60933"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=60889"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=60889"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=60889"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}