GST Refund for Steel Utensil Manufacturers (2026)

Do you make steel kitchenware and see a quarterly decline in working capital due to accrued input tax credits that you are unable to use? You are not the only one.

The completed utensils are only taxed at 5%, but raw materials like stainless steel coils are taxed at 18%; the GST system creates a structural mismatch. The inverted duty structure is a loophole that traps thousands of rupees in unused ITC.

This blog provides a comprehensive reference on GST refunds for steel utensil manufacturers in 2026, including eligibility, calculation, filing, and compliance.

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GST Rate Steel Utensils 5% 2025 Update And 2026 Status

The 5% output GST rate applies to the supply of standard steel kitchen utensils
The rate applies whether sold to wholesalers, retailers, or end consumers
Export of steel utensils is treated as a zero-rated supply, enabling a full ITC refund

GST On Kitchen Utensils, Steel Thali GST Rate, Pressure Cooker GST Rate

Dinner sets and steel thalis: 5% GST
Kitchenware like pateela, kadai, and tawa: 5% GST
Pressure cookers (separately categorised as a cooking equipment) are subject to 12% GST.
Steel tumblers and glasses: 5% GST
Cutlery, such as forks and spoons: 5% GST

GST On Steel Items in India: Raw Materials vs Finished Goods

Category	Item	GST Rate
Raw Materials	Stainless steel coils	18%
Raw Materials	Cold-rolled steel sheets and strips	18%
Raw Materials	Hot-rolled steel coils	18%
Raw Materials	Aluminium sheets	18%
Raw Materials	Nickel alloys	18%
Finished Goods	Steel spoons, ladles, serving utensils	5%
Finished Goods	Stainless steel cutlery sets	5%
Finished Goods	Steel cookware sets	5%
Finished Goods	Decorative steel kitchen items	12%
Finished Goods	Enamelled iron utensils	12%

IDS Gap 13% Steel Utensils Explained With Table

Item	GST Rate	Type
Stainless Steel Coils	18%	Raw Material
Plastic Packaging	18%	Input
Paper Packaging	5%	Input
Steel Utensils	5%	Finished Goods

HSN Code Steel Utensils 7323 And Classification Under GST

7323 10: Iron or steel wool; pot scourers and scouring or polishing pads

7323 91: Cast iron articles

7323 92: Articles of stainless steel

7323 93: Articles of iron or steel (enamelled)

7323 94: Articles of iron or steel (other, non-enamelled)

7323 99: Other

HSN 73239390 73239310 For Stainless Steel Kitchenware

73239310: Stainless steel kitchenware, including utensils for cooking and serving

73239390: Other stainless steel household articles not elsewhere classified

Both of these codes qualify for the IDS refund and are subject to a 5% GST charge.

Inverted Duty Structure Steel Utensils: Core Problem For Manufacturers

Manufacturers pay 18% on stainless steel coils and other inputs, but charge only 5% on finished utensils. This means:

Output GST liability is lower than the input GST paid
ITC accumulates continuously and cannot be fully utilised
The excess ITC sits as a receivable on the balance sheet
Cash flow is impacted because the manufacturer has paid more tax than collected

Rule 89(5) Steel Utensils Refund Calculation With Example

Rule 89(5) Steel Utensils Formula Explained:

Maximum Refund = (Turnover of Inverted Rated Supply / Adjusted Total Turnover) x Net ITC minus Tax Payable on Inverted Rated Supply

Worked Example Of IDS Refund Steel Manufacturers

Particulars	Amount (Rs.)
Turnover Of Inverted Rated Supply	50,00,000
Net ITC	9,00,000
Adjusted Total Turnover	50,00,000
Output Tax Payable (5% on 50 lakhs)	2,50,000
Refund Amount (Formula Applied)	6,50,000

How To Claim GST Refund for Steel Utensils Using RFD 01

Log in to the GST portal at (https://www.gst.gov.in/) using your credentials
Navigate to Services, then Refunds, then Application for Refund
Select the refund category as Refund on account of ITC accumulated due to Inverted Tax Structure
Select the relevant tax period for which the refund is being claimed
Upload all mandatory supporting documents, including GSTR-1, GSTR-3B, purchase invoices, and CA certificate
Submit the application and note the Application Reference Number (ARN)
Track the status of the application under the Track Application Status section
Respond to any deficiency memos or clarification notices within the stipulated time

Common Errors In GSTR 1 vs GSTR 3B Mismatch Steel

Turnover declared in GSTR-1 does not match GSTR-3B
HSN-wise summary in GSTR-1 not reconciling with output tax in GSTR-3B
ITC claimed in GSTR-3B exceeded the GSTR-2B auto-populated credit
Amendments in GSTR-1 have not been reflected in GSTR-3B of the same period
Export invoices in GSTR-1 are not reflected correctly in Table 6A

Documents Required For GST Refund Steel Utensils Claim

Filed copies of GSTR-1 and GSTR-3B for the relevant period
Purchase invoices for raw material procurement showing 18% GST
Sales invoices showing 5% output GST on steel utensils
Bank statements reflecting payments to suppliers
Statement of turnover of inverted-rated supply (self-certified)
Calculation sheet as per Rule 89(5)
CA certificate certifying that the ITC has not been transferred or utilised for other purposes (if applicable)
Declaration that no unjust enrichment has occurred (Form RFD-01 Annexure)
For exporters: Shipping bills, bill of lading, and bank realisation certificate

GST Refund Rejection Reasons for Steel Utensils Manufacturers

Reason	Impact
Incorrect HSN code used in invoices or returns	Claim rejected at the scrutiny stage
GSTR-1 vs GSTR-3B turnover mismatch	Delay in processing and possible notice
Excess ITC claimed, including blocked credits	Notice issued, demand raised
Missing or incomplete documents	Application returned or rejected
Wrong refund category selected in RFD-01	Application treated as invalid
ITC claim exceeds GSTR-2B auto-populated credit	Excess claim disallowed
Refund claimed for a period beyond two years	Time-barred and rejected outright

How MYGSTRefund Supports Steel Utensil Manufacturers With GST Refunds

MYGSTRefund streamlines GST refund computation under the inverted duty structure, specifically for steel utensil manufacturers
Enables a smooth end-to-end refund filing with reduced manual intervention and faster processing
Offers real-time tracking of refund applications to improve cash flow planning and visibility
Includes advanced reconciliation tools to validate ITC and minimise errors
Detects eligible refund amounts accurately and lowers the chances of rejection
Provides dedicated expert assistance to ensure timely compliance and efficient refund processing

Frequently Asked Questions

1. Is GST On Steel Utensils Refundable In India?
Yes, GST refund is allowed when businesses operate under an inverted duty structure. Refund is claimed under Section 54(3)(ii) when ITC accumulates due to higher input
taxes.

2. What is the Steel Utensils 5% GST Rate Update for 2025 and 2026?
Most steel kitchen utensils attract 5% GST in 2025 and 2026. Certain categories, like enamelled or cast iron items, may fall under 12% based on HSN classification.

3. How To File RFD 01 Steel Utensils Claim Online?
Log in to the GST portal, select refund under IDS, upload documents, and submit the application. An ARN is generated, and processing usually takes up to 60 days.

4. What is the Inverted Duty Structure Steel Utensils Industry?
It occurs when input GST rates are higher than output GST rates on steel utensils. This leads to the accumulation of ITC and eligibility for refund claims.

5. Which Steel Utensils 7323 HSN Code Should Be Used?
Steel utensils fall under HSN 7323 in Chapter 73. Specific classification depends on product type, such as 73239310 or 73239390.

6. How Does Rule 89(5) Steel Utensils Refund Work?
Refund is calculated using a formula based on Net ITC and turnover ratio. It excludes the tax payable on inverted-rated supplies.

7. What Causes ITC Blocked Steel Kitchenware India?
ITC is blocked when claimed on ineligible items like personal use or restricted categories. Incorrect claims can lead to penalties and refund rejection.

Note: This content is for informational purposes only and not professional tax advice.