GST Refunds

All businesses and individuals who supply goods and services are liable to pay GST to the Government. However, in certain instances, businesses and individuals might be eligible for a GST refund. GST refunds can be claimed in the following cases:

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GST Refunds

  • Excess cash balance from the electronic cash ledger or excess tax payment.
  • IGST paid on export of services (with payment of tax).
  • Accumulated ITC due to exports of goods and services without payment of tax.
  • Accumulated ITC due to supplies made to SEZ unit/SEZ developer (without payment of tax).
  • ITC accumulated due to inverted tax structure (tax on inputs higher than a tax on outputs).
  • If a recipient of deemed exports has paid the tax on inward supplies that qualify as deemed exports and has claimed ITC for the tax paid in their electronic credit ledger, the recipient of these deemed exports is eligible for a refund of the tax amount paid (on a condition that the supplier of such deemed exports does not claim a refund).
  • Tax paid on supplies made to SEZ units/SEZ developers (with payment of tax).
  • Tax paid on an intrastate supply later held as interstate supply and vice versa.
  • If a supplier of deemed exports paid tax on deemed supplies without charging and collecting tax from the buyer of deemed exports, then he would be eligible to claim it as a refund (on a declaration that the recipient or buyer of such deemed exports does not claim a refund).
  • On account of Assessment or Provisional Assessment or Appeal or any other order.
  • There is also a provision for claiming a refund on ‘Any other ground’ in RFD-01.

Due Date For Claiming Gst Refunds

The application for claiming a GST refund should be made within 2 years of the relevant date. The concept of ‘relevant date’ differs across the different instances of GST refunds as follows

Instance of GST refundRelevant date
Refunds when goods are exported by air or seaThe date on which the aircraft or the ship carrying the goods leaves India
Refunds when goods are exported by landThe date on which the goods pass the frontier
Refunds when goods are exported by postThe date when the goods are dispatched by the concerned post office
Refunds when goods are considered to be deemed exportsThe date on which the return on such goods is filed
Refunds when services have been exported and when the supply of services has been completed before receiving the paymentThe date on which the payment for the services is received
Refunds when services have been exported and the payment for such services has been received before the invoice has been issuedThe date when the invoice is issued
Refund of tax due to decree, judgement, direction or order of the Appellate Authority, Appellate Tribunal or any other courtThe date when the decree, judgement, direction or order is communicated
Refund for the unutilized part of the Input Tax CreditThe last date of the financial year in which the claim for refund is made
Refund when GST is paid provisionally under the rules of the GST ActThe date when the tax is adjusted after the final assessment is done

Applying for GST Refund

Within such due date as mentioned above Form RFD-01 shall be filed by the taxpayer on GST portal.

Process Of Filing Gst Refund Claim (form Rfd-01)

  • Log in to the GST portal and select the ‘Refund pre-application form’ option.
  • Prior to filing Form RFD-01, ‘Refund pre-application form’ shall be filed. Fill in the details asked, and click on ‘Submit’. A confirmation of submission will be displayed on the screen. The following details must be reported:
    • Nature of business – Manufacturer, merchant exporter, trader, and service provider
    • Date of issue of IEC (only for exporters) – Those applying for a refund on account of exports (without payment of tax) must furnish the date of issue of the Import Export Certificate.
    • Aadhaar number of the primary authorised signatory is mandatory.
    • Value of exports made in the FY 2019-2020 (only for exporters) – This must be computed at the GSTIN level and not PAN level.
    • Income tax paid in FY 2018-2019.
    • Advance tax paid in FY 2019-2020.
    • Capital expenditure and investment made in FY 2018-2019.
  • Select the ‘Application of refund’ option.
  • Select the reason for refund and create refund application.
  • In the next page select the tax period of refund.
  • Enter the details of refund as per the refund claim being made and submit the application.
  • Filed applications can be tracked using the “Track Application Status” under Refunds.

Response From Gst Officer

  • Provisional refund can be granted in form RFD-04 for certain types of refunds. It is to be issued within 7 days from the acknowledgement date with at least 90% of the amount of the refund claimed granted.
  • Acknowledgement in form RFD-02 is issued within 15 days from filing the refund of the application if it is complete in all aspects.
  • There is an option introduced to withdraw the application of refund by the applicant in form RFD-01W. Once the withdrawal application is submitted, the refund, which was debited to the taxpayer’s electronic credit or cash ledger upon the filing of the refund application, will be credited to the respective ledger.
  • Otherwise, a deficiency memo in form RFD-03 can be issued by the officer within the same time limit to rectify any deficiencies by the applicant. At this point, an auto re-credit of the amount of refund claimed in the electronic cash/ credit ledger will happen if the ledger had been debited at the time of filing the refund. A fresh application must be submitted in such cases.
  • Notice to seek clarification in form RFD-08 can be issued by the officer for rejecting the application or recovery of refund granted by mistake. In such cases, the applicant must reply to it within 15 days in form RFD-09.
  • A sanction or rejection order shall be passed by the officer in form RFD-06. Following this, in cases of sanction, a payment order in form RFD-05 is passed. Alternatively, RFD-05 is sometimes issued after RFD-04.
  • In certain cases, the officer may pass an order for withholding refund sanctioned in form RFD-07 (part-B). Here, RFD-05 is never issued.
  • Order to re-credit the refund from the taxpayer’s electronic cash or credit ledger in cases of rejection or when the provisional refund was granted in form PMT-03.

Receipt of GST refund amount

After the application for GST refund is submitted by the applicant, the refund is usually paid within period of 60 days. If, however, the refund has not been paid within 60 days, an interest would have to be paid on the delayed refund.

Refund process in case of IGST paid on export of goods (with tax payment)

Since the volume of transactions in this case can be huge in exporters, the GST portal facilitates a simpler process of GST refund. No separate application in form RFD-01 is required in this case.

But certain conditions must be satisfied by the exporter for processing of GST refunds-

  1. Table 6A in GSTR-1 must be filled up with Shipping bill details related to export transactions (with payment of tax) and filed by the due date.
  2. The summary details must be reported in item 3.1 (b) of Table 3.1 of GSTR-3B, the corresponding tax must be paid, and the return should be filed by the due date prescribed by GST law.
  3. Care must be taken to report the total of IGST and cess in GSTR 3B as a figure equal to that of GSTR-1.
  4. The GST authority considers the shipping bill as a refund application. The GST portal sends export details to the ICEGATE as disclosed on GSTR-1. Also, a confirmation that GSTR-3B was filed for the relevant tax period is sent. The Customs system compares the information on GSTR-1 to the information on their shipping bill and Export General Manifest (EGM) and then processes the refund.
  5. The ICEGATE system will share payment information with the GST portal once the refund payment has been credited to the taxpayers’ accounts. The GST portal will share the information with the taxpayers by SMS and e-mail.