Inverted Duty Structure in GST: Is Your ITC Refund Expiring?



 If you manufacture Pharma, Footwear, Textile, Corrugated Boxes, or Steel 

Utensils in India — the government may owe you lakhs of rupees right now.

It's called an Inverted Duty Structure (IDS) refund. Most manufacturers 

have never filed a single claim.


WHAT IS INVERTED DUTY STRUCTURE?

When GST on your raw materials is HIGHER than GST on your finished 

product — that difference gets permanently stuck in your GST ledger 

every month.

Example: A footwear manufacturer buys leather at 12% GST but sells 

finished shoes at 5%. That 7% difference = blocked ITC every month.


WHO IS AFFECTED?


→ Pharma Manufacturers (API 18% → Medicine 5%)

→ Footwear Manufacturers (Leather 12-18% → Shoes 5%)

→ Textile Manufacturers (Yarn 12% → Garments 5%)

→ Corrugated Box Industry (Paper 18% → Box 12%)

→ Steel Utensils (Metal 18% → Utensils 12%)

→ EV Manufacturers (Components 18% → EV 5%)


HOW MUCH CAN YOU RECOVER?

→ Pharma (₹10Cr turnover) = up to ₹1.05 Crore

→ Footwear (₹10Cr turnover) = up to ₹10 Lakhs

→ EV Manufacturing (₹10Cr turnover) = up to ₹12 Lakhs


LEGAL BASIS

Under Section 54(3) CGST Act, any registered taxpayer can claim 

accumulated ITC refund. Filed via Form RFD-01 using Rule 89(5) formula.


⚠️ DEADLINE: FY 2023-24 refund expires March 31, 2026. No extensions.

Read the complete guide here:

https://www.getmyca.com/inverted-duty-structure-gst

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