Ordinarily, the phenomenon of taxation involves payment of tax
at lower rates on the inputs and a relatively higher rate of tax on
the final product / output. On the contrary, as the name suggests,
inverted duty structure connotes a situation when the rate of tax
on inward supply is higher than rate of tax on outward supply.
There are several scenarios leading to inverted duty structure. One
such example is a case where while the input and output supplies
are same, the rate varies, especially, where the outward supplies
are made under a concessional notification. Such concession on the
outward supplies could be on account of several reasons such as,
the purpose for which the goods are used by the receiver, entity
status of the receiver, etc.
