GST Refund Zero Rated supplies
What is Zero Rated supply: – Zero rated supply is defined under section 16 of IGST act. According to section, all exports (whether of Goods or services or both) and supplies to SEZs (Special Economy Zone) have been defined as Zero Rated supplies. Now, let’s discuss in details on topic “GST refund Zero rated supplies.”
GST Refund:- “Refund includes” refund of tax paid on Zero rated supplies or refund of tax paid on supply of Goods regarded as Deemed Export or refund of unutilised Input tax credit.
Refund options under Zero Rated supplies: – There are two option of refund under Zero rated supplies.
Zero rated supplies with payment of IGST: – Under this option, registered person charged IGST on supply of Goods or services and then claim refund of such payment of IGST. Under this method following types of refund are prescribed.
- Refund of tax paid on export of Goods with payment of Tax
- Refund of tax paid on Services Export with payment of Tax
- Refund of tax paid on supplies made to SEZ with payment of Tax
Zero Rated supplies without payment of IGST:- Under this option, registered person supply Goods or services under Letter of undertaking (LUT) without payment of IGST and then claim refund of accumulated of INPUT TAX CREDIT. Under this methods following type of refund are prescribed.
- Refund of unutilized ITC on account of export without payment of Tax
- Refund of unutilized ITC on account of supplies made to SEZ without payment of tax.
Also see, “Various types of Refund Claim under GST”
GST Refund Restrictions Section 54(3):- No refund of unutilised input tax credit shall be allowed in cases where the goods exported out of India are subject to export duty.
Also, If supplier of goods or services takes benefit of duty drawback in respect of central tax then no refund of input tax credit is allowed. If supplier claims IGST refund then in that case also no refund of input tax credit is allowed.
GST refund Zero rated supplies with payment of IGST
GST Refund in case Export of Goods on payment of IGST: – For refund of IGST paid on export of goods, registered person is not required to file separate GST refund application. Following procedure is to be complied for GST refund.
1. A Registered person is required to file shipping bill. The shipping bill is treated as a refund application for the purpose of the export of goods with the payment of IGST.
2. Details of goods exported as to be reported in Table 6A of Form GSTR-1. In case where the shipping bill particulars are wrongly mentioned in Form GSTR-1 then the only way out, is to amend the Form GSTR -1 of subsequent tax period in Table 9A.
3. Summary details of goods exported are to be reported in Table 3.1(b) of Form GSTR-3B
The amount mentioned in Form GSTR 3B should not be less than the amount mention in Form GSTR-1. After matching the above details on the GSTIN and ICEGATE portal by custom officer, the IGST Refund would automatically be credited to the bank account of exporter.
GST Refund in case Export of Services on payment of IGST: – For refund of IGST paid on export of services, following procedure to be complied for GST Refund.
1. Details of services exported to be reported in Table 6A of Form GSTR-1.
2. Summary detail of Services exported is to be reported in Table 3.1(b) of Form GSTR-3B. There is validation check in the GSTN system to ensure that IGST paid on the export in any particular month (as per table 3.1(b) of GSTR 3B) is not less than the refund claimed by the exporter (Table 6A of GSTR -1)
3. File Form GST RFD 01 under the head “Refund of tax paid on Export of services with payment of Tax” within the time limit prescribed. Form GST RFD 01 should be accompanied with the declaration / Statements / undertaking / Certificates along with supporting documents.
Also see, “GST Refund documents prescribed”
GST Refund in case of supplies made to SEZs with payment of IGST:- The supplier who supplies goods or services to SEZ can claim refund of tax paid on supplies made to SEZ. In respect of supplies to SEZ with payment of tax, following procedure to be complied for GST Refund.
1. Details of Goods or Services supplied to SEZ to be reported in Table 6B of GST return in Form GSTR-1.
2. Summary detail of Goods or Services supply to SEZ is to be reported in Table 3.1(b) of Form GSTR-3B. There is validation check in the GSTN system to ensure that IGST paid on the export in any particular month (as per table 3.1(b) of GSTR 3B) is not less than the refund claimed by the exporter (Table 6B of GSTR -1)
3. File Form GST RFD 01 for GST refund. Form GST RFD 01 should be accompanied with the declaration / Statements / undertaking / Certificates along with supporting documents.
Supply to SEZ developer or SEZ Unit: – The CBIC vide circular no 48/22/2018 GST dated 14-06-2018 clarifies that a transaction shall be qualifies as supply to SEZ, only if such supplies have been received by the SEZ developer or unit for authorised operations.
GST refund Zero rated supplies without payment of IGST
Refund of unutilised input tax credit:- A Registered person may claim refund of unutilised ITC in respect of “Zero rated supply without payment of Tax”. Following procedure to complied in respect of refund of unutilised ITC due to zero rate supply without payment of tax.
1. Furnishing the details of export supplies in Table 6A or Table 6B of GSTR-1
2. Filing Form GSTR 3B.
3. File Form GST RFD 01 for GST refund. Form GST RFD 01 should be accompanied with the declaration / Statements / undertaking / Certificates along with supporting documents.
4. Rule 89(2) of CGST Rules specifies documents to be attached with refund application.
In case GST refund claimed is less than two rupees lakh then it is not be necessary applicant to furnish any documentary and other evidences. The applicant may file a declaration that the incidence of such tax and interest has not been passed on to any other person. Such declaration should be based on the documentary or other evidences available with him.
Time limit for Refund claim (Section 54):-
Registered persons may make refund application before the expiry of Two years from the relevant date. “Relevant date” means:-
Relevant date in case of Goods exported out of India: –
In case good exported through Sea or Air: Relevant date is the date on which ship or aircraft in which goods are loaded leave India.
In case good exported through the land route: Relevant date is the date on which Goods pass the custom frontier.
In case good exported through Post: Relevant date is the date on which Goods are dispatched by post office.
Relevant date in case of Deemed Export: – Relevant date is the date on which the return relating to deemed export is furnished,
Relevant date in case of Services export:- Relevant date is the Invoice date in case when payment is received in advance before issue of invoice. On the other hand if the supply of service is completed before receipt of payment then the relevant date is the date on which payment is received in convertible foreign exchange or Indian rupees (if permitted by RBI).
GST refund due to judgement or Decree or order or Direction of the Appellate Authority or Appellate Tribunal or any court, the relevant date is the date on which such communication of order or Judgement or decree etc. issued.
The relevant date in respect of GST refund due to Inverted Rate duty shall be due date of the return for the tax period.
In case of GST refund due to provisional payment of tax the relevant date is the date on which the tax is adjusted after the final assessment. In all other cases not mentioned above the relevant date for GST refund is the date on which the tax is paid.
However, the limit of Two years does not apply in case where GST refund is due to excess balance in electronic cash ledger.
Minimum GST Refund: – As per Section 54(14), minimum GST refund limit is Rs 1000. The minimum limit shall be applied for each head separately (CGST, SGST and IGST) instead of cumulatively.
Also see, ”SEIS Refund from DGFT”
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