Answer

GST

Rule 89(4) refund formula with a worked example

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  1. Facts

    Rule 89(4) sets the maximum refund as turnover of zero-rated supply multiplied by net ITC, divided by adjusted total turnover, for the relevant period. You claim the lower of this figure and the balance in your credit ledger on the day of filing.

  2. Provisions and law

    • Rule 89(4), CGST Rules 2017Formula for refund of ITC on zero-rated supplies made without tax
    • Sec 54(3), CGST Act 2017Refund of unutilised ITC is allowed on zero-rated supplies without tax and on inverted duty

  3. Analysis

    Suppose in a quarter you have export turnover of ₹40,00,000, domestic taxable turnover of ₹10,00,000 and net ITC of ₹4,50,000. Maximum refund is 40,00,000 x 4,50,000 / 50,00,000 = ₹3,60,000. If your credit ledger balance at filing is ₹3,20,000, claim ₹3,20,000. The portal computes the formula from the figures you enter, so the inputs must match your returns.

  4. Conclusion

    1. Take export turnover for the period from GSTR-1 and GSTR-3B
    2. Take adjusted total turnover and net ITC for the same period
    3. Apply the formula and compare with the ledger balance
    4. Enter the figures in RFD-01 and check the system computation

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Refund of ITC on exports without payment of tax, RFD-01

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