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Circular 175: Manner of filing refund of unutilised ITC for export of electricity

Updated on :  

08 min read.

The power generating units faced issues while filing a refund of unutilised input tax credit for export of electricity since the filing of shipping bill isn’t required. Accordingly, amendments via circular No. 175/07/2022-GST, dated 6th July 2022, were made to clarify the manner of filing a refund for unutilised input tax credit (ITC) on the export of electricity.

Requirements for filing application for unutilised ITC refund

The applicant must log into the GST portal and file the refund application under the “Any Other” category. In the remark column, the applicant needs to select “Export of electricity- without payment of tax (accumulated ITC)”. The applicant need not make any debit from the electronic credit ledger at this time.

The applicant would need to upload the details contained in Statement 3B of FORM GST RFD-01 as shown in the image below, which contains the number and date of the invoices, details of energy exported, and tariff electricity per unit.

GST electricity

The applicant also needs to upload a copy of the statement of scheduled energy for the electricity exported by such a power generation plant issued as part of the Regional Energy Account by the Regional Power Committee Secretariat (as shown in the below image). The statement should be for the period for which the ITC refund has been claimed and shall include a copy of the relevant agreement that details the tariff per unit for the electricity exported. The applicant also needs to provide details of computation of the amount of refund in Statement -3A of FORM GST RFD-01.

GST electricity

Timelimit, for ITC refund in case of export of electricity

The CGST Act, 2017, specifies two years from the relevant date for applying for a refund. Under the GST law, electrical energy is considered as good. Since it is exported continuously via transmission lines, it’s not possible to determine the specific date of export. However, the Regional Power Committee (RPC) issues a statement of scheduled energy for the export of electricity as a part of REA (Regional Energy Account). Accordingly, at this moment, the relevant date would be the last date of the month, wherein electricity was exported as per the monthly REA issued by the RPC.

How to calculate or compute the eligible refund amount?

The CGST Act provides the formula for the computation of refund of the unutilised income tax credit on account of zero-rated supplies. Since the export of electricity is considered a zero-rated supply, the refund of the unutilised input tax credit would be calculated using the formula below:

Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) x Net ITC /Adjusted Total Turnover

The quantum of energy exported, as reflected in the REA issued by the RPC Secretariat for the relevant month, would be deemed to be the export quantity during the said month and would be used to calculate the value of zero-rated supply in case of the export of electricity.

The adjusted total turnover means the sum of the value of- 

  1. The total turnover in a State or Union territory as defined under Section 2(112);
  2. The turnover of zero-rated as well as non-zero-rated supply of services, 

and excluding – 

  1. The value of exempted supplies other than zero-rated supplies; and 
  2. The turnover of supplies in respect of which refund has been claimed under sub-rule (4A) or (4B) or both, if any, during such period.

The circular also mentions that the quantum of electricity exported per the invoice and statement of scheduled energy exported should be the same. However, there might be cases where the quantum of electricity exported per invoice doesn’t match the statement uploaded with REA on the RPC website. In these cases, the turnover of export of electricity needs to be calculated using the lower quantum of electricity exported as mentioned in the statement of scheduled energy exported and the quantum mentioned in the invoice issued for such export.