Free tool
Inverted duty refund calculator
Work out the maximum refund of unutilised credit when your inputs are taxed higher than your sales.
Sales taxed at a lower rate than your inputs, for the period you claim.
ITC on inputs only. Leave out input services and capital goods.
As defined in rule 89(4), for the same period.
All credit on inputs plus input services in the period.
- Turnover × Net ITC ÷ adjusted total turnover
- ₹ 75,000.00
- Less: tax payable × (Net ITC ÷ ITC on inputs and services)
- ₹ 15,000.00
- Maximum refundZero if the result is negative
- ₹ 60,000.00
FAQ
Questions people ask
- What is an inverted duty structure?
- Your inputs are taxed at a higher rate than the goods or services you sell, so credit piles up that you can't use. Section 54(3) allows a refund of that unutilised credit.
- What is the rule 89(5) formula?
- Maximum refund = (turnover of inverted rated supply × Net ITC ÷ adjusted total turnover) − (tax payable on such supply × Net ITC ÷ ITC availed on inputs and input services).
- What counts as Net ITC?
- Input tax credit availed on inputs during the relevant period. Input services and capital goods are not part of Net ITC in this formula, although input services appear in the second part.
- What are adjusted total turnover and the relevant period?
- They have the same meaning as in rule 89(4): the period is the one your claim covers. Adjusted total turnover is your turnover in the State (leaving out services) plus the turnover of services, without exempt supplies other than zero-rated ones.
- Is the answer the refund I will get?
- It is the ceiling. The claim also has to meet the other conditions of rule 89 and section 54, and the officer decides the sanctioned amount.
Rules last checked 22 October 2026. This is general information, not tax advice. Check the notification or ask your CA before you rely on a figure.
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