What is GST Refund?
When the GST paid is more than the GST liability a situation of claiming GST refund arises. Under GST the process of claiming a refund is standardized to avoid confusion. The process is online and time limits have also been set for the same.
What are the circumstances where GST can be claimed?
1. Refund of any Balance in Electronic Cash Ledger can be claimed in the return furnished under section 39 in the Form GSTR 3 GSTR 4 and GSTR 7 before the expiry of 2 years from the relevant date.
2. Export of goods or service or both on payment of IGST
2. Refund of tax paid by a specialized agency of UNO, consulate or embassy of foreign countries – on inward supplies of goods or services or both, by making refund application within 6 months from the end of the quarter in which such supply was received.
3. Registered person may claim a refund of unutilized Input Tax Credit at the end of any tax period
6. Payment of tax on a provisional basis
7. CGST and SGST/ UTGST paid on intra-state supply but held as inter-state supply.
8. Advance tax paid by a Casual Taxable Person or Non-Resident Taxable Person under Section 27(2).
9. Excess payment of taxes.
4. Other cases – refund is available for:
- Finalization of provisional assessment.
- Favorable order of appellate authority, in favor of any taxpayer.
- Finalization of investigation procedures -No/Less tax liability arising thereof.
- Refund of tax paid wrongly that is when IGST paid instead of CGST/SGST or vice versa
5. Refund to international tourist – Where an international tourist procured goods in India while leaving the country to seek a refund of IGST paid, the refund of IGST paid will be available at the port of exit provided adequate proof has been presented to substantiate the fact that the person had entered India as a tourist for genuine non-immigrant purposes. However, the international tourist will exclude:
- A person resident in India, exiting the country for a long or short duration irrespective of whether they hold an Indian Passport.
- Deputation of Indian Resident to overseas diplomatic posts.
- Children born in India to Foreign Nationals during their stay in India.
Conditions for claiming a refund in all cases excluding export of goods
The conditions for claiming a refund in all the cases except the export of goods on payment of IGST are:
1. Application must be made within 2 years from the relevant date
2. GSTR 3 for the relevant tax period should have been filed
3. The outward supplies are not nil rated or exempt
4. In the case of goods exported
- They were not subjected to export duty
- No drawback of central tax or claims refund of integrated tax paid on supplies has been availed
5. In the case of Casual Taxable Person or Non-Resident Taxable Person, all monthly returns have been filed during the period of registration
6. In the case of CGST and SGST/ UTGST paid on intrastate supply but held as inter-state supply, the appropriate amount of IGST has been paid [Note: In case IGST had been paid instead of CGST and SGST/ UTGST, no refund would be available]
PROCEDURE FOR GST REFUND:
1. File for GST RFD 01 along with the required documents in Annexure 1 to the form.
2. The assessee shall receive an acknowledgment in GST RFD 02 if there are no problems with the application in GST RFD 01. In case of any issues, it will be communicated in GST RFD 03.
3. The Proper Officer may pass an order in GST RFD 04 sanctioning the amount due within 7 days from the date of the acknowledgment if the Proper Officer is prima facie satisfied.
4. The Proper Officer shall pass an order for refund in GST RFD 06 and issue a payment advice in form GST RFD 05 post which the amount automatically gets credited to the bank account of the registered person.
5. The order has to be passed within 60 days from the date of receiving a complete application.
6. In the case of export supplies, the Act also provides for a provisional refund of 90% of the refund claim within 7 days of the date of the acknowledgment provided the supplier was not prosecuted in the 5 years immediately preceding the refund period.
What happens if the refund gets delayed?
1. The Government shall pay an interest of 6% from the date immediately after the expiry of 60 days from the date of receipt of application of refund.
2. The Government shall pay an interest of 9% from the date immediately after the expiry of 60 days from the date of receipt of application of refund in case of refund arising from an order passed by the adjudicating authority, appellate authority, or appellate tribunal.