GST provides for a clearer and efficient invoice based tracking system, verifying the transactions on an individual basis, thus, allowing systematic checking of the same. It comes as a huge relief for manufacturers or exporters, especially those in a 100% EOU or Special Economic Zone, whose working capital gets tied up in this cumbersome refund process. In this article, I have tried to cover the GST refund process in detail.
Situations Leading to Refund Claims
A claim for refund may arise on account of:
- Export of goods or services2. Supplies to SEZs units and developers3. Deemed exports4. Refund of excess tax paid in advance by casual tax payer5. Refund of CGST & SGST paid by treating the supply as intra- State supply which is subsequently held as interState supply and vice versa6. Refund on account of issuance of refund vouchers for taxes paid on advances against which, goods or services have not been supplied7. Refund arising on account of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court8. Finalization of provisional assessment9. Refund of accumulated Input Tax Credit on account of inverted duty structure10. Refund of pre-deposit11. Refunds to International tourists of GST paid on goods in India and carried abroad at the time of their departure from India12. Refund of taxes on purchase made by UN or embassies etc.
Time Limit
Refund claim needs to be filed within two years from relevant date. A refund of unutilized input tax credit can be claimed at the end of any tax period.
Relevant Date
As per explanation to Sec. 54 of CGST Act, 2017, “relevant date” means – a) in the case of goods exported out of India where a refund of tax paid is available in respect of goods themselves or, as the case may be, the inputs or input services used in such goods, – b) in the case of supply of goods regarded as deemed exports where a refund of tax paid is available in respect of the goods, the date on which the return relating to such deemed exports is furnished; c) in the case of services exported out of India where a refund of tax paid is available in respect of services themselves or, as the case may be, the inputs or input services used in such services, the date of – d) in case where the tax becomes refundable as a consequence of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court, the date of communication of such judgment, decree, order or direction; e) in the case of refund of unutilized input tax credit on account of inverted duty structure, the end of the financial year in which such claim for refund arises; f) in the case where tax is paid provisionally under this Act or the rules made there under, the date of adjustment of tax after the final assessment thereof; g) in the case of a person, other than the supplier, the date of receipt of goods or services or both by such person; and h) in any other case, the date of payment of tax.
Interest on delayed refunds
If any tax ordered to be refunded is not refunded within 60days from the date of receipt of application for refund claim, interest at such rate not exceeding 6% shall be payable to the applicant by government from the date immediately after the expiry of 60 days from the date of receipt of application under the said subsection till the date of refund of such tax. In case of refund arises from an order passed by an adjudicating authority or Appellate Authority or Appellate Tribunal or court which has attained finality and the same is not refunded within sixty days from the date of receipt of application filed consequent to such order, interest at such rate not exceeding 9% shall be payable in respect of such refund from the date immediately after the expiry of 60 days from the date of receipt of application till the date of refund. Procedure for refund claim:
A. Export of goods with the payment of IGST
B. Claim of unutilized ITC on account of Export of goods and services without payment of IGST Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) x Net ITC ÷Adjusted Total Turnover Where,- (A) “Turnover of zero-rated supply of goods” means the value of zero-rated supply of goods made during the relevant period without payment of tax under bond or letter of undertaking; (B) “Turnover of zero-rated supply of services” means the value of zero-rated supply of services made without payment of tax under bond or letter of undertaking, calculated in the following manner, namely:- Zero-rated supply of services is the aggregate of the payments received during the relevant period for zero-rated supply of services and zero-rated supply of services where supply has been completed for which payment had been received in advance in any period prior to the relevant period reduced by advances received for zero-rated supply of services for which the supply of services has not been completed during the relevant period; (C) “Adjusted Total turnover” means the turnover in a State or a Union territory, as defined under clause (112) of section 2, excluding the value of exempt supplies other than zero-rated supplies, during the relevant period;
C. Zero Rated Supplies to SEZ unit / Developers with payment of IGST
D. Claim of unutilized ITC on account of Zero rated supplied to SEZ Unit / Developers without payment of IGST E. Supplies regarded as deemed export As per Notification No. 48/2017, following supplies of goods shall be treated as deemed exports:- The application may be filed by, – a) the recipient of deemed export supplies; or b) the supplier of deemed export supplies in cases where the recipient does not avail of input tax credit on such supplies and furnishes an undertaking to the effect that the supplier may claim the refund. Following documents are required to be submitted by a registered person who have made deemed export:- F. Refund on account of CGST & SGST paid by treating the supply as intra- State supply which is subsequently held as inter-State supply and vice versa Application for refund required to be filed in FORM GST RFD-01 by the supplier on the common portal along with a statement showing the details of transactions considered as intra-State supply but which is subsequently held to be interState supply; G. Refund on account of excess tax paid Application for refund required to be filed in FORM GST RFD-01 by the supplier on the common portal along with a statement showing the details of the amount of claim on account of excess payment of tax; A declaration 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, in a case where the amount of refund claimed does not exceed two lakh rupees and Certificate by CA in prescribed format provided as Annexure 2 of FORM GST RFD-01 for the same. H. Refund on account of issuance of refund vouchers for taxes paid on advances against which, goods or services have not been supplied Refund of account of excess tax paid Application for refund required to be filed in FORM GST RFD-01 by the supplier on the common portal along with a statement showing the details of the amount of claim on account of issuance of refund vouchers for taxes paid on advances against which, goods or services have not been supplied I. Claim of amount by casual tax payer on account of excess tax paid in advance As per Sec. 27 of CGST Act, 2017, a casual tax payer is required to deposit an amount equivalent to the estimated tax liability of such person for the period for which the registration is sought in advance. A claim can be made of any amount, after adjusting the tax payable by the applicant out of the advance tax deposited by him in the last return required to be furnished by him. Application for refund is required to be filed in FORM GST RFD-01 by the supplier on the common portal and should be submitted with a declaration by the registered person and Certificate by CA or CMA 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, in a case where the amount of refund claimed does not exceed two lakh rupees. J. Refund arising on account of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court Application for refund required to be filed in FORM GST RFD-01 by the supplier on the common portal along with A declaration by registered person and certificate from CA or CMA 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, in a case where the amount of refund claimed does not exceed two lakh rupees K. Refund of accumulated Input Tax Credit on account of inverted duty structure As per Sub-section 3 of Section 54 of CGST Act, 2017 refund of unutilized input tax credit shall be allowed in cases where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council. Application for refund required to be filed in FORM GST RFD-01 by the supplier on the common portal along with a statement containing the number and the date of the invoices received and issued during a tax period. Declaration of unjust enrichment is not required to be submitted in case of such refund claims. Refund of input tax credit shall be granted as per the following formula – Maximum Refund Amount = {(Turnover of inverted rated supply of goods) x Net ITC ÷Adjusted Total Turnover} – tax payable on such inverted rated supply of goods. Due to the non-availability of the refund module on the common portal, it has been decided by the competent authority, on the recommendations of the Council, that the applications/ documents /forms pertaining to refund claims on account of zero-rated supplies shall be filed and processed manually till further orders. Conclusion To summarize, GST law to envisages a simplified, time bound and technology driven refund procedure with minimal human interface between the taxpayer and tax authorities. However, refund module has not been made available on GST portal till date. Recommended Articles
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