GST Refund - Process and Grounds to claim GST Refund and ITC

INTRODUCTION

Have you ever fall under such situation where you mistakenly paid excess amount of tax then your actual tax liability and is looking for its refund. Then have a look on this article for your solution.

Usually, we did mistakes while filing GST challan i.e., at the time of making payment of GST we wrongly pay excess amount of tax. And that excess tax paid then reflected as a balance in Electronic Cash Ledger which can be claimed as a refund on GST portal. Further, GST refund can be file up to the time fixed as per act; that means we cannot able to file refund for that period whose time limit has been expired.

Under GST regime, there will be standardised form for making any claim for refunds. The claim and sanctioning procedure will be completely online and time-bound and is not like the previous procedures which are time consuming and cumbersome.
 

GROUNDS FOR REFUND UNDER GST

The situations where refund can be claimed are as under:

1. Excess payment due to mistake.

For instance, Mr. A is having GST liability for the month of October of Rs. 20,000/- but by mistake he made payment for Rs 2,00,000/-. Now Mr. A can avail refund of excess amount paid i.e., Rs. 1,80,000/-.
 

2. Refund of accumulated input tax credit on account of inverted duty structure (i.e., rate of tax on input purchased is more than the rate of tax on outward supplies)

For example, Mr. B is the supplier of fabric bags (output) on which his output GST liability is @5%. However, he had paid GST on non-woven fabric used (input raw material) @12%. So, he is eligible to avail refund of unutilized input tax credit arises in this situation.
 

3. Refund of input tax credit in respect of goods or services or both used for making further supplies in the following situations:

• Export of goods or services
• Supplies to Special Economic Zone (SEZ) units and developers
• Deemed Exports (i.e., those transactions in which the goods supplied do not leave the country and the supplier in India receives the payment for goods either in home currency or in foreign exchange)

However, the refund under Point No.# 3,4 and 5 shall be allowed only, if it is zero-rated supply i.e., no export duty is payable at the time of export and drawback for central tax has not been claimed.

4. Finalisation of provisional assessment. In provisional assessment 90% of the total refund claim has been granted for zero-rated supplies.
    
5. Refund of pre- deposit.
    
6. Refund of taxes on purchase made by UN or embassies or other notified agencies etc.

As per international obligations, supplies made to UN bodies and embassies are exempt from payment of GST by way of granting them refund of input tax paid on purchases made by them.

However, in such cases refund application shall be filed by such bodies within 6 months from the last day of quarter in which supply was received.

7. Refund to international tourists of GST paid on goods in India and carried abroad at the time of their departure from India.
    
8. Refund arising on account of judgement, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court.
    
9. Refund on account of issuance of refund vouchers for taxes paid on advances against which, goods or services have not been supplied.
    
10. Refund of CGST & SGST paid by treating the supply as intra-state supply which is subsequently held as inter-state supply and vice versa.
     
11. Refund to casual/non-resident taxable persons

Casual and non-resident taxable person has to pay tax in advance at the time of registration. They become eligible for refund at the end of registration period, if amount of advance tax paid is higher the actual tax liability on supplies made during their effective registration period. But no refund has been allowed if such person fails to file returns due during the time their registration was effective.
 

TIME LIMIT FOR CLAIMING REFUND

GST refund can be claimed within 2 years from relevant date which can be different from case to case basis.

Relevant dates under different cases are as under:

INTEREST IN CASE OF DELAY IN GETTING REFUND

• If there is delay in getting refund from government’s part beyond 60 days, then government has to pay interest @6% p.a. on the refund amount.
   
• And if interest is arising on account of delay for the reason of adjudication, then government has to pay interest @9% p.a. on the refund amount. 

REQUIREMENTS FOR GETTING REFUND

The claim and sanctioning procedure will be completely online and time-bound. And for claiming refund Form RFD01 (refund application form) has to be electronically submitted within two years from relevant date.

On filing of Form RDF01, an acknowledgment receipt is generated in PDF file format. And once the inspection of refund application is done satisfactorily, the amount of refund gets credited to the selected bank account through ECS, NEFT or RTGS.

Note: If the amount of refund is below Rs 1,000, no refund will be provided.
 

DOCUMENTS REQUIRED FOR CLAIMING GST REFUND

• For every claim, statement of relevant invoices relating to the claim required to be submitted. It is to be noted that only statement is to be submitted not the invoices itself.
• In case of export, in addition to statement of relevant invoices, the relevant bank realisation certificates evidencing receipt of payment in foreign currency needs to be submitted.
• If claim is made by supplier of SEZ unit, an endorsement from the Proper Officer evidencing receipt of such goods/services in the SEZ also needs to be submitted along with other documents. Further in this case SEZ also needs to submit a declaration that they have not availed ITC of the tax paid by the supplier.
• If refund is on account of order or judgement of appellate authority or court, the reference number of such order should also be given.
• If refund claimed is less than 2 Lakhs then self-declaration of applicant is required declaring that the incidence of tax has not been passed to any other person.
• If refund claimed is 2 Lakhs or more then certificate from a Chartered Accountant or Cost Accountant will have to be given.

Hope all your queries relating to GST refund are sorted now but still if some are unanswered then you can contact us at agam@hubco.in or post your query on our contact page. We have the team of GST experts and can solve all your worries relating to GST compliances whether it is registration or filing of returns to handling all your GST related issues.