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GST Inverted-Duty Refund Calculator

See how much input tax credit builds up when you buy at a higher GST rate than you sell, and what a refund can recover.

Prepared by ecomca · rates awaiting CA reviewUpdated Calculated in your browser; copied links include your figures

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Calculator

Note:
Example values — replace with yours.

Your sales

Claim period

Enter every figure below for this one period.

Which period is the refund for?

The refund period decides the formula: the old one for periods before 1 Nov 2026, the amended one from 1 Nov 2026.

Sales of the products where the GST on inputs is higher than on the sale.

Presets are today’s common rates. Use “Custom rate” for any other rate, including special rates and rates for earlier periods.

Tax payable on these sales: ₹5,00,000 (5% of ₹1,00,00,000)

For example, when part of these sales is taxed at another rate.

All your supplies in this state except exempt ones; the same as above if you only sell these products.

Your input tax credit this month

GST on goods you bought: raw material, packing material, stock. Not capital goods: their credit availed on or after 1 Apr 2027 is refunded over 60 months, which this calculator does not include yet.

GST on ads, marketplace fees, logistics, rent and other services.

Goods notified under Notification 5/2017–Central Tax (Rate), as amended, are not eligible for refund of unutilised ITC.

Your result

Maximum refund this month

₹2,00,000

Of ₹2,00,000 piling up this month, up to ₹2,00,000 can be claimed; ₹0 stays locked (₹0 over a year).

Credit piling up
₹2,00,000
Stays locked
₹0
Stays locked over a year (12 months)
₹0
Time limit to claim
2 years from the relevant date

Refund period from 1 Nov 2026: the amended formula, so input services credit is in Net ITC and the full tax payable is taken off.

Refund working

Refund working
Item₹ this monthHow we got this
Turnover × Net ITC ÷ adjusted total turnover₹7,00,000
Less tax payable−₹5,00,000
Maximum refund₹2,00,000
Credit piling up₹2,00,000
Stays locked₹0

Amended formula. Net ITC here is ₹7,00,000: ITC on inputs, plus input services availed on or after 1 Nov 2026. Tap ⓘ to see the working.

Making a claim

Time limit
2 years from the relevant date
Provisional refund
Rate pending verification
Maximum refund over a year
₹24,00,000

Documents to keep ready

  • Your GSTR-1 and GSTR-3B for the period, both filed.
  • GSTR-2B for the period, matched to your purchase register.
  • A list of your sales invoices for the period, with the GST rate on each.
  • A list of your purchase invoices, with inputs (goods), input services and capital goods shown separately.
  • The working of the refund: turnover, adjusted total turnover, Net ITC and tax payable.
  • The HSN code and GST rate of each product, to show it is not on the notified “no refund” list.
  • Your bank account details, validated on the GST portal.

What this tells you

If you buy at a higher GST rate than you sell at, credit builds up in your ledger faster than you can use it. Part of it can be claimed back as a refund; the rest stays locked.

Enter one month’s or quarter’s figures to see the maximum refund you could claim, how much credit is piling up, and how much stays locked over a year.

Assumptions used

  • Product GST rate choices: 0%, 5%, 12%, 18%, 40%, or a custom rate.
  • You are a regular GST-registered taxpayer, and the inverted-rated products are sold within India (not exported).
  • Turnover and tax are for the inverted-rated products only; adjusted total turnover covers all supplies from the same GSTIN in the period, excluding exempt supplies.
  • ITC on inputs (goods) excludes capital goods. ITC on input services is entered separately, by when it was availed: before or on or after the input-services date.
  • The yearly figures repeat the same month or quarter 12 or 4 times.
  • The result is the most the formula allows. The refund actually sanctioned can be lower after the officer’s review.
Legal references and sources
Inverted-duty refund formula
Rule 89(5), CGST Rules, 2017, as substituted by Notification 26/2018–Central Tax dated 13 June 2018 (with effect from 1 July 2017), with the second part of the formula as amended by Notification 14/2022–Central Tax dated 5 July 2022, for refund applications filed on or after 5 July 2022 (Circular 181/13/2022-GST dated 10 November 2022). Input services are left out of Net ITC because clause (ii) of the proviso to section 54(3), CGST Act, 2017 covers inputs only, as upheld by the Supreme Court in Union of India v. VKC Footsteps India Pvt. Ltd. (13 September 2021).
Effective from 5 Jul 2022 · Last verified 27 Oct 2026 · Official source
Time limit for a refund claim
Section 54(1), CGST Act, 2017.
Last verified 27 Oct 2026
Goods not eligible for an inverted-duty refund
Notification 5/2017–Central Tax (Rate), as amended — goods notified as not eligible for refund of unutilised ITC.
Last verified 27 Oct 2026
Amended refund formula applies from (input services in Net ITC)
Rule 89(5), CGST Rules, 2017, as substituted by Notification No. 05/2026–Central Tax dated 26 October 2026, in force from 1 November 2026: Maximum refund = (Turnover of inverted rated supply of goods and services × Net ITC ÷ Adjusted total turnover) − tax payable on such inverted rated supply. Net ITC = ITC availed on inputs and eligible input services during the relevant period, plus ITC on capital goods attributable to the relevant period; eligible input services are input services on which ITC has been availed on or after 1 November 2026.
Effective from 1 Nov 2026 · Last verified 27 Oct 2026 · Official source
Capital goods ITC refundable from
Rule 89(4) and 89(5), CGST Rules, 2017, as amended by Notification No. 05/2026–Central Tax dated 26 October 2026, with effect from 1 April 2027: ITC on capital goods attributable to the relevant period is added to Net ITC, for capital goods whose ITC is availed on or after 1 April 2027.
Effective from 1 Apr 2027 · Last verified 27 Oct 2026 · Official source
Months a capital-goods refund is spread over
Rule 89(4)(G), CGST Rules, 2017, inserted by Notification No. 05/2026–Central Tax dated 26 October 2026, with effect from 1 April 2027: ITC on capital goods attributable to the relevant period = aggregate of (1/60 × eligible ITC availed on capital goods × number of months) less reversals, over sixty months from the month the ITC was availed.
Effective from 1 Apr 2027 · Last verified 27 Oct 2026 · Official source
Product GST rate choices
Notification No. 09/2025–Central Tax (Rate) dated 17 September 2025, effective 22 September 2025, on the recommendations of the 56th GST Council meeting (nil, 5%, 18% and 40%); verified as on 2 November 2026. Use 'Custom rate' for special rates such as 3% or 0.25%, and for 12% or 28% on sales made before 22 September 2025 (28% plus cess continued on tobacco and pan masala until 31 January 2026).
Effective from 22 Sept 2025 · Last verified 27 Oct 2026 · Official source

How this is calculated

Refund periods before 1 Nov 2026: the old 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). Net ITC = ITC availed on inputs, excluding capital goods.

Rule 89(5), CGST Rules, 2017, as substituted by Notification 26/2018–Central Tax dated 13 June 2018 (with effect from 1 July 2017), with the second part of the formula as amended by Notification 14/2022–Central Tax dated 5 July 2022, for refund applications filed on or after 5 July 2022 (Circular 181/13/2022-GST dated 10 November 2022). Input services are left out of Net ITC because clause (ii) of the proviso to section 54(3), CGST Act, 2017 covers inputs only, as upheld by the Supreme Court in Union of India v. VKC Footsteps India Pvt. Ltd. (13 September 2021).

Refund periods from 1 Nov 2026: the amended formula

Rule 89(5), CGST Rules, 2017, as substituted by Notification No. 05/2026–Central Tax dated 26 October 2026, in force from 1 November 2026: Maximum refund = (Turnover of inverted rated supply of goods and services × Net ITC ÷ Adjusted total turnover) − tax payable on such inverted rated supply. Net ITC = ITC availed on inputs and eligible input services during the relevant period, plus ITC on capital goods attributable to the relevant period; eligible input services are input services on which ITC has been availed on or after 1 November 2026.

Step by step

  1. Tax payable = turnover × the output GST rate, unless you enter your own figure.
  2. First part = turnover × Net ITC ÷ adjusted total turnover.
  3. Second part: old formula, tax payable × Net ITC ÷ (ITC on inputs + ITC on input services); amended formula, the tax payable itself.
  4. Maximum refund = first part − second part, and never below zero. Nil for a product on the excluded list.
  5. Credit piling up = ITC on inputs + ITC on input services − tax payable, and never below zero.
  6. Stays locked = credit piling up − maximum refund; over a year, that figure × 12 months or × 4 quarters.
  7. Net ITC is the ITC on inputs. Under the amended formula it also includes ITC on input services availed on or after 1 Nov 2026: all of it for a period from 1 Nov 2026, and the part you enter for a period that straddles the date.
  8. Capital goods are not part of the calculation.

Terms used here

Worked examples

Example: a product sold at 5% with higher-rated inputs

A month’s sales of ₹1,00,00,000 (taxable value), all at 5% GST, so ₹5,00,000 of tax is payable. Adjusted total turnover is the same ₹1,00,00,000. ITC on inputs (goods) is ₹4,00,000 and ITC on input services, such as ads, marketplace fees and logistics, is ₹3,00,000.

  1. Refund period from 1 Nov 2026 (amended formula): Net ITC = ₹4,00,000 + ₹3,00,000 = ₹7,00,000.
  2. First part: ₹1,00,00,000 × ₹7,00,000 ÷ ₹1,00,00,000 = ₹7,00,000. Less the tax payable, ₹5,00,000.
  3. Maximum refund: ₹7,00,000 − ₹5,00,000 = ₹2,00,000, all of the ₹2,00,000 piling up.
  4. Refund period before 1 Nov 2026 (old formula): Net ITC = ITC on inputs only, ₹4,00,000.
  5. First part: ₹1,00,00,000 × ₹4,00,000 ÷ ₹1,00,00,000 = ₹4,00,000. Second part: ₹5,00,000 × ₹4,00,000 ÷ (₹4,00,000 + ₹3,00,000) = ₹2,85,714.29.
  6. Maximum refund: ₹4,00,000 − ₹2,85,714.29 = ₹1,14,285.71; ₹85,714.29 stays locked this month, or ₹10,28,571.43 over 12 months.

Maximum refund this month: ₹2,00,000.00 for a month from 1 Nov 2026, or ₹1,14,285.71 for a month before it, with ₹85,714.29 staying locked.

Example: the Oct–Dec 2026 quarter, with input services credit on both sides of 1 Nov 2026

The Oct–Dec 2026 quarter, which begins before 1 Nov 2026: sales of ₹1,00,00,000 at 5% GST, so ₹5,00,000 of tax is payable; adjusted total turnover is the same. ITC on inputs (goods) is ₹9,00,000. ITC on input services is ₹3,00,000: ₹1,00,000 availed before 1 Nov 2026 and ₹2,00,000 availed on or after it.

  1. Amended formula (Net ITC = ₹9,00,000 + ₹2,00,000 availed on or after 1 Nov 2026 = ₹11,00,000): ₹11,00,000 − ₹5,00,000 = ₹6,00,000.
  2. Old formula (Net ITC = inputs only, ₹9,00,000): ₹9,00,000 − ₹5,00,000 × ₹9,00,000 ÷ ₹12,00,000 = ₹9,00,000 − ₹3,75,000 = ₹5,25,000.
  3. Under the amended formula the ₹1,00,000 availed before 1 Nov 2026 stays out of Net ITC. Which formula applies to a period that straddles the date is not settled, so the calculator shows both.

Maximum refund this quarter: ₹6,00,000.00 on the amended formula, or ₹5,25,000.00 on the old one.

Our GST Refunds & APOB service prepares the refund working and the documents behind it.

Questions sellers ask

What is an inverted duty structure?

It is when the GST rate on what you buy is higher than the rate on what you sell — for example, packaging or raw materials at a higher rate than the finished product. The credit on your purchases is more than the tax on your sales, so it keeps building up in your electronic credit ledger. A refund lets you get some of it back in cash.

Is the credit on ads, marketplace fees and logistics refunded?

For refund periods from 1 Nov 2026, yes: credit on input services availed on or after that date counts in Net ITC, and the full tax payable is taken off. For periods before 1 Nov 2026 the old formula applies, and Net ITC is the credit on inputs (goods) only. Rule 89(5), CGST Rules, 2017, as substituted by Notification No. 05/2026–Central Tax dated 26 October 2026, in force from 1 November 2026: Maximum refund = (Turnover of inverted rated supply of goods and services × Net ITC ÷ Adjusted total turnover) − tax payable on such inverted rated supply. Net ITC = ITC availed on inputs and eligible input services during the relevant period, plus ITC on capital goods attributable to the relevant period; eligible input services are input services on which ITC has been availed on or after 1 November 2026.

Which formula applies to my claim?

It goes by the period the refund is for, not the date you file. A period before 1 Nov 2026 uses the old formula; a period from 1 Nov 2026 uses the amended one. Pick the period in the calculator and it switches. A quarterly filer’s Oct–Dec 2026 quarter begins before the date and ends after it; which formula applies to it is not settled, so the calculator shows the amended figure with the old one beside it. For that quarter you can also enter the services credit availed before and after 1 Nov 2026 separately (“Some of each”).

What is the time limit for a claim?

2 years from the relevant date (Section 54(1), CGST Act, 2017.). A claim filed after that is not allowed, so credit for an older period can stay locked for good.

Do GST rate changes affect the refund?

Yes. When GST rates change — as with the rate rationalisation often called GST 2.0 — a product that was not inverted can become inverted, or the other way round. Compare the rates on your main purchases with the rate on each product you sell after any change, and use the turnover and credit from the period after the change.

Is credit on capital goods refunded?

Credit on capital goods availed on or after 1 Apr 2027 can be refunded, spread over 60 months. This calculator does not include it yet: Net ITC here leaves out capital goods such as machinery and equipment. Rule 89(4) and 89(5), CGST Rules, 2017, as amended by Notification No. 05/2026–Central Tax dated 26 October 2026, with effect from 1 April 2027: ITC on capital goods attributable to the relevant period is added to Net ITC, for capital goods whose ITC is availed on or after 1 April 2027.

How often can I claim?

A claim is made for a tax period: a month, or a quarter if you file quarterly. You can also group consecutive periods in one claim, as long as each is within the time limit (2 years from the relevant date). This calculator works one month or quarter at a time; add up the periods you plan to claim together.

Which products cannot get this refund?

Goods notified under Notification 5/2017–Central Tax (Rate), as amended, are not eligible for refund of unutilised ITC.

Want our team to look at these numbers alongside your books?

We keep books, file GST and TDS returns and prepare monthly MIS for D2C and marketplace sellers. Share your figures and we will walk you through what we find.

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Disclaimer

Indicative estimate for general information only, based on the assumptions shown on this page. It is not professional advice. Rates on this page have not yet been verified by a CA.

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