Refund Claim under GST

Refund Claim under GST

GST Tax Refund means a refund of taxes by the Government that was paid by register person either in excess or was not liable to be taxed. Section 54 of the CGST Act, 2017, Section 77 of the CGST Act, 2017 and Rule 89(2) of CGST Rules, 2017 are the relevant provisions to be consider while applying for refund claim under GST law. The entire GST refund claim and processing is done online on GST portal.

GST Refund Situations:- The first and foremost question that arises is in what situations wherein a refund claim under GST may arise. To answer the question we have following 12 situations in which claim of the refund arise:-

1) Excess payment of GST and interest thereon due to error or mistake in either calculation or submission

2) Refund to non-resident taxable person or causal taxable person

3) Refund of accumulated ITC (Input tax Credit) on account of inverted duty structure. (Also see, “GST refund on Inverted duty structure“)

4) Refund of accumulated ITC (Input tax Credit) on account of zero rated supplies without payment of tax. This includes exports and supplies to SEZ. (Also See, “GST refund on Zero rated supply“)

5) Refunds to International tourists of GST paid on goods in India and carried abroad at the time of their departure from India

6) Refund of taxes on purchase made by United Nations Organisation or any multilateral financial Institution and organisation notified under the United Nations Act 1947 or embassies etc

7) Refund of taxes paid on supplies to developers and SEZs units

8) Taxes paid against Export of Goods or services;

9) Deemed Export supplies;

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 arising on account of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court

12) Finalisation of provisional assessment

13) Refund due to taxes paid on advances receipt against which there is no supply of goods or services.

Also See, SEIS Refund form DGFT

Please note that the GST law requires that every claim for refund is to be filed within 2 years from the relevant date.

GST Refund Claim Process

• Every claim under GST needs to be filed in a Form RFD 01 to the proper officer.
• After submission of the GST refund form, an auto-generated acknowledgement on GST RFD – 02 is sent to the assesseee at its email address or as an SMS on your phone number.
• The proper officer scrutinizes the application for its completeness within period of 15 days from date of filing said application. If application found incomplete the proper office issue form RFD-03 and sent to registered person to make the necessary correction in refund application.

If a person collects tax more than what is due on supplies, the person, who has borne the incidence of tax, is allowed to file refund claim under provisions of Section 54 of the CGST Act, 2017.

A casual / Non-resident taxable person at the time of registration pay GST in advance due to requirement of act. If GST paid in advance is more than the actual tax liability then they are eligible to fill refund claim. Thus law permits refund to them. GST refund shall not be granted until such person has filed all the GST returns due during the time their registration was effective.

Supplies to UN bodies and embassies may be exempted from payment of GST. This exemption is being in operational by way of a refund mechanism. So a taxable person making supplies to such bodies would charge the tax and remit the same to government account.

However, under Section 55 of CGST Act, 2017 the UN bodies and other notified entities can fill refund claim of the taxes paid by them on their purchases. The GST Refund claim has to be made before the expiry of 6 months from the last day of the quarter in which such supply was received.

List of Documents for submitting refund application

Rule 89(2) laid down that the application under sub-rule (1) of rule 89 of CGST Rules, 2017, shall be accompanied by any of the following documentary evidences in Annexure 1 in Form GST RFD-01, as applicable, to establish that a refund is due to the applicant, namely:-

1.  The order with reference number of the order passed by the proper officer or Appellate Tribunal or an Appellate Authority  or Court resulting in such refund or payment reference number of the amount specified in section 107(6)  and section 112(8) claimed as refund;

2.  In case where the refund is on account of export of goods, statement containing the number and date of shipping bills or bills of export and the number and the date of the relevant export invoices.

3.  In case where refund is on account of export of services, statement containing the number and date of invoices with the Bank Realisation Certificates or Foreign Inward Remittance Certificates.

4.  In case of the supply of goods made to a Special Economic Zone unit or a Special Economic Zone developer than summary containing number and date of invoices with the evidence regarding the endorsement specified in second provision to Rule 46(1).

5.  In case of the supply of services made to a Special Economic Zone unit or a Special Economic Zone developer than summary containing number and date of invoices with the evidence regarding the endorsement specified in second provision to Rule 46(1) and details of payment.

6.  In case where the refund is on account of supply of goods or services made to a Special Economic Zone unit or a Special Economic Zone developer than a declaration that Special Economic Zone unit or Zone developer has not availed the Input tax credit.

7.  In case GST refund is due on account of deemed exports than a statement containing the number and date of invoices along with such other evidence as may be notified in this behalf.

8.  In case GST refund is due on account of unutilised Input tax credit than a statement containing the number and the date of the invoices received and issued during a tax period.

9.  In case of GST refund due to provisional assessment finalisation than a copy of the final assessment order and reference number for the said order.

10.  A statement containing the details of transactions which earlier considered as intra-State supply but which is subsequently held as inter-State supply;

11.  A statement containing the details of the amount of GST refund claim due to excess payment of tax;

12.  In case where the amount of refund claimed does not exceed two lakh rupees than a declaration that incidence of tax paid, interest or other amount which is claimed as refund has not bee passed to any other person. Provided that the said declaration is not required to be furnished in respect of the GST refund cases covered under clause (a) or clause (b) or clause (c) or clause (d) or clause (f) of section 54 (8);

13.  In case where the amount of refund claimed exceeds two lakh ruppes than chartered accountant or cost accountant certificate in Annexure 2 of FORM GST RFD-01 to the effect that the incidence of tax, interest or any other amount claimed as refund has not been passed on to any other person. Provided that chartered accountant or cost accountant certificate is not required in respect of GST refund cases covered under clause (a) or clause (b) or clause (c) or clause (d) or clause (f) of subsection (8) of section 54;

Below herein are certain special cases of refund where separate process to claim the refund is followed:- 

Credit Note:-

• Where goods are returned back or issuance of discounts after supply credit notes are issued;
• The taxes paid initially on the supply would be higher than what is actually payable.
• Here arises a scenario where excess tax paid by the supplier needs to be refunded
• Instead of refunding it outright, it is sought to be adjusted after verifying the corresponding reduction in the input tax credit availed by the recipient
• Section 43 of the CGST Act, 2017 provides for procedure for reduction in output liability on account of issuance of such credit notes. This is another form of refund by adjustments in the output tax liability

Treatment of Zero rated supplies:-

• Supplier of a zero rated supplies entitled to claim input tax credit in respect of goods or services or both used for such supplies even though they might be non-taxable or even exempt supplies.
• The claim can be made under two options. Either he can export under LUT and claim refund of accumulated Input Tax Credit or he may export on payment of integrated tax and claim refund thereof as per the provisions of Section 54 of CGST Act, 2017.
• All exports (whether of goods or services) as well as supplies to SEZs have been categorised as Zero Rated Supplies in the IGST Refunds under GST Act, 2017.

Payment of Wrong Tax:-

It is quite common that the tax payer pay tax under wrong head. In such cases, the refund claim of the wrong tax paid earlier will be entertained without subjecting it to the provision of unjust enrichment.

Refund to International Tourist:-

Section 15 of the IGST Act, 2017 says if an international tourist procuring goods in India, may while leaving the country can get refund of integrated tax paid by them.

Also See,” SEIS Refund from DGFT

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