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Refund under GST

refund under gst

Are you a registered GST taxpayer? Are you eligible for claiming a GST refund under the ACT?  Get full details regarding the Refund under GST Act. Section 54 of the CGST Act governs the Refund under GST.

Q1. What is the form for applying for refund under GST by the person other than the person (a specialised agency of UN Organization or any MFIO notified under UN Act etc) notified under section 55?

Answer: GST Form – GST RFD-01

Q2. What is the Time Period under which the eligible person is required to file the Application of Refund GST?

Answer: Eligible applicant has to file the application of refund under GST before the expiry of two years from the relevant date.

Q3. What is the Time Period under which the notified person as per section 55 is required to file the Application of Refund GST?

Answer: Notified person (a specialized agency of UN Organization or any MFIO notified under UN Act, Consulate or Embassy of foreign countries or any other person or class of persons) entitled to a refund of tax paid by it on inward supplies of goods or services or both, can make an application for such refund, before the expiry of 6 months from the last day of the quarter in which such supply was received by such notified person.

Q4. Why is it necessary to file GST Refund application before the expiry of the stipulated time period?

Answer: Refund facilitates working capital requirements, expansion, and reconstruction of the existing businesses.

Q5. What are the different situations where claim for refund may arise?

Answer: Refund under GST may arise on account of:

  1. Refund of excess balance in electronic cash ledger
  2. Refund of ITC on Export of Goods & Services without Payment of Tax
  3. On account of supplies made to SEZ unit/ SEZ developer (without payment of tax)
  4. Refund on account of ITC accumulated due to Inverted Tax Structure
  5. On account of Refund by Recipient of deemed export
  6. Refund on account of supplies to SEZ unit/ SEZ developer (without payment of tax)
  7. Export of services with payment of tax
  8. Tax paid on an intra-state supply which is subsequently held to be inter-state supply and vice- versa
  9. On account of refund by the supplier of deemed export
  10. Any other reason (Specify)
  11. Excess payment of tax
  12. On account of Assessment/ Provisional Assessment/ Appeal / Any other order

Q6. Are there any exceptions to refund of GST?

Answer: Yes, Section 54(3) of CGST Act specifies that:

  • No Refund of any unutilized Input Tax Credit (ITC) shall be allowed in the cases where the subjected goods are exported out of India and are subjected to export duty
  • No Refund of Input Tax Credit (ITC) shall be allowed, if the supplier of Goods or Services or both avails of drawback in respect of Central Tax or claims refund of the Integrated Tax paid on such supplies

Q7. Can the Proper office withhold payment of refund or adjust any dues from such refund?

Answer: Yes, as per Section 54(10) of the CGST Act:

  • PO (Proper Officer) can withhold the disbursement of GST Refund if the registered person makes default in furnishing any return or default in making payment of dues like tax, interest, and penalty UNTIL “the said person has furnished it or paid it”.
  • PO (Proper Officer) may deduct from the amount of refund due, any tax, interest, penalty, fee or any other amount which the taxable person is liable to pay but which remains unpaid under this Act or under the existing law

Further as per Section 54(11) of the CGST Act states that:

If the commissioner is of the opinion that grant of such a refund is likely to adversely affect the revenue i.e. the department, in that case, he may, after giving an opportunity of being heard, may withhold the refund till such time as he may determine.

Withhold of Refund in case of casual taxable person or a non-resident taxable person

Section 54(13) of the CGST Act states that in case of a casual taxable person or a non-resident taxable person, under section 27(2) is required to deposit advance tax and is required to file returns as per section 39 make any defaults in furnishing such returns, then refund shall not be granted until such returns for all the periods as per the certificate of registration is not furnished.

Section 54(14) of the CGST Act states that:

No Refund under Section 54(5) or Section 54(6) shall be paid to an applicant if the amount of such claim is less than one thousand rupees.

Circular No. 125/44/2019 – GST dated 18th November 2019, it is clarified that the limit of rupees one thousand shall be applied for each tax head separately and not cumulatively.

Q8. What is “Relevant Date” means under GST for the purpose of Refund?

Answer:

  • 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;
  • if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India; or
  • if the goods are exported by land, the date on which such goods pass the frontier; or
  • if the goods are exported by post, the date of despatch of goods by the Post Office concerned to a place outside India; or
  • in the case of a 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
  • 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 receipt of payment in convertible foreign exchange, where the supply of services had been completed prior to the receipt of such payment; or
  • issue of invoice, where payment for the services had been received in advance prior to the date of issue of the invoice;
  • 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;
  • where a refund of unutilized input tax credit under sub-section (3), the end of the financial year in which such claim for refund arises;
  • in the case where tax is paid provisionally under this Act or the rules made thereunder, the date of adjustment of tax after the final assessment thereof;
  • in the case of a person, other than the supplier, the date of receipt of goods or services or both by such person; and
  • in any other case, the date of payment of tax

Q9. What is procedure for filing the GST Refund application?

Answer: Procedure for all refund applications filed in FORM GST RFD-01 on the common portal with effect from 26th September 2019:

  • FORM GST RFD-01 shall be filled on the common portal by an applicant seeking a refund. The applicant shall file all the relevant documents which are part of FORM GST RFD-01 itself, and also uploading of other documents/invoices which shall be required to be provided by the applicant for processing of the refund claim.

Circular No. 125/44/2019 – GST dated 18th November 2019

The above-said circular has prescribed a comprehensive list of documents that are to be provided by the applicant at the stage of filing of the refund application.

The facility of uploading these other documents shall be available on the common portal where four documents, maximum size for each documents is 5MB, which has to be uploaded along with the refund application.

There is no requirement for physically submitting any of the documents to the jurisdictional PO.

  • The Application Reference Number (ARN) will be generated only after the successful completion of filing the refund application in FORM GST RFD-01, which needs to be completed in all respects.
  • On the successful generation of ARN, the refund application along with all the supporting documents shall be transferred electronically to the jurisdictional proper officer.

The limit of 15 days for issuance of acknowledgment or a deficiency memo either case the period shall be counted from the date of generation of the ARN.

This will remove the need for an applicant to visit the jurisdictional tax office for the submission of the refund application and /or any of the supporting documents.

Likewise, the acknowledgment or deficiency memo under Form GST RFD-02 and Form GST RFD-03 respectively be issued electronically by the Jurisdictional tax officer.

If a refund application is electronically transmitted to the wrong jurisdictional officer, he/she shall reassign it to the correct jurisdictional officer electronically as soon as possible, but no later than three working days, from the date of generation of the ARN.

Q10: What is the procedure for disbursement of Refund?

Answer:

  • refund application assigned to a Central tax officer, both the sanction order (FORM GST RFD-04/06) and the corresponding payment order (FORM GST RFD-05) for the sanctioned refund amount, under all tax heads, shall be issued by the Central tax officer only.
  • refund applications assigned to a State/UT tax officer, both the sanction order (FORM GST RFD04/06) and the corresponding payment order (FORM GST RFD-05) for the sanctioned refund amount, under all tax heads, shall be issued by the State/UT tax officer only.

Q11. Who issues refund under GST?

Answer: Once the bank account of the applicant is validated, Public Financial Management System (PFMS) will create a unique assessee code ( which is a combination of GSTIN plus validated bank account number) for the applicant.

PFMS will use the generated code for all refund payments made to the applicant in their respective bank account.

It is advisable for the applicant to use the same bank details in the successive refund applications so as to avoid repetition while validating and generation of multiple unique assessee codes for the same GSTIN.

In cases where an applicant wishes to avail of the refund in a different bank account, a new unique assessee code (comprising of GSTIN plus new bank account) will be generated by the PFMS after successful validation of the said bank account.

Q12. What is the time frame for disbursement of refund under GST?

Answer:

Section 56 of the CGST Act clearly states that if any tax ordered to be refunded is not refunded within 60 days of the date of receipt of an application, interest at the rate of 6% (notified vide notification No. 13/2017-Central Tax dated 28th June 2017) on the refund amount starting from the date immediately after the expiry of sixty days from the date of receipt of application (ARN) till the date of actual refund of such tax shall have to be paid to the applicant.

The tax shall be considered to have been refunded only when the amount has been credited to the bank account of the applicant.

Interest will be calculated for the period starting from the date immediately after the expiry of sixty days from the date of receipt of the application till the date on which the amount is credited to the bank account of the applicant.

Tax authorities are advised to issue the final sanction order in FORM GST RFD-06 and the payment order in FORM GST RFD-05 within 45 days of the date of generation of ARN so that the disbursement is completed within 60 days.   

Q13. I have paid IGST on the Exports, How I can claim the refund of IGST paid on such exports?

Answer: The refund of IGST paid on goods exported out of India is governed by rule 96 of the CGST Rules. The shipping bill filed by an exporter is deemed to be an application for refund in such cases, but the same is deemed to have been filed only when the export manifest or export report is filed and the applicant has filed the return in FORM GSTR-3B for the relevant period duly indicating the IGST paid on goods exported in Table 3.1(b) of FORM GSTR-3B.

Additionally, the exporter is expected to furnish the relevant details of the exported goods in Table 6A of FORM GSTR-1 of the relevant period.

Only where the common portal is able to validate the consistency of the details so entered by the applicant, the relevant information regarding the refund claim is forwarded to Customs Systems. Upon receipt of the information from the common portal regarding furnishing of these details, the Customs Systems processes the claim for refund and an amount equal to the IGST paid in respect of such export is to be electronically credited to the bank account of the applicant.

Q14. How to apply for Refund under GST

Answer: Log in to your GST dashboard, navigate to services and select “Application of Refund” under the head Refunds as shown below in the image

APPLICATION FOR REFUND

The taxpayer is required to select the refund type from the available options on the GST portal as shown in the below image

select the refund type

After confirming the refund type, please select the Tax Period for which application is to be filed i.e. the taxpayer is required to select the months starting from registration date or post-registration date in month dropdown

select the tax period

Q15. What are the documents required to be provided along with the refund application?

Answer:

Type of RefundDeclaration/Statement/Undertaking/ Certificates to be filled onlineSupporting documents to be additionally uploaded
Refund of unutilized ITC on account of exports without payment of taxDeclaration under second and third proviso to section 54(3) Undertaking in relation to sections 16(2)(c) and section 42(2) Statement 3 under rule 89(2)(b) and rule 89(2)(c) Statement 3A under rule 89(4)Copy of GSTR-2A of the relevant period Statement of invoices (Annexure-B) Self-certified copies of invoices entered in Annexure-B whose details are not found in GSTR-2A of the relevant period BRC/FIRC in case of export of services and shipping bill (only in case of exports made through non-EDI ports) in case of goods
Refund of tax paid on export of services made with payment of taxDeclaration under second and third proviso to section 54(3) Undertaking in relation to sections 16(2)(c) and section 42(2) Statement 2 under rule 89(2)(c)BRC/FIRC /any other document indicating the receipt of sale proceeds of services Copy of GSTR-2A of the relevant period Statement of invoices (Annexure-B) Self-certified copies of invoices entered in Annexure-A whose details are not found in GSTR-2A of the relevant period Self-declaration regarding non-prosecution under sub-rule (1) of rule 91 of the CGST Rules for availing provisional refund
Refund of unutilized ITC on account of Supplies made to SEZ units/developer without payment of taxDeclaration under third proviso to section 54(3) Statement 5 under rule 89(2)(d) and rule 89(2)(e) Statement 5A under rule 89(4) Declaration under rule 89(2)(f) Undertaking in relation to sections 16(2)(c) and section 42(2) Self-declaration under rule 89(2)(l) if amount claimed does not exceed two lakh rupees, certification under rule 89(2)(m) otherwiseCopy of GSTR-2A of the relevant period Statement of invoices (Annexure-B) Self-certified copies of invoices entered in Annexure-B whose details are not found in GSTR-2A of the relevant period Endorsement(s) from the specified officer of the SEZ regarding receipt of goods/services for authorized operations under second proviso to rule 89(1)
Refund of tax paid on supplies made to SEZ units/developer with payment of taxDeclaration under second and third proviso to section 54(3) Declaration under rule 89(2)(f) Statement 4 under rule 89(2)(d) and rule 89(2)(e) Undertaking in relation to sections 16(2)(c) and section 42(2) Self-declaration under rule 89(2)(l) if amount claimed does not exceed two lakh rupees, certification under rule 89(2)(m) otherwiseEndorsement(s) from the specified officer of the SEZ regarding receipt of goods/services for authorized operations under second proviso to rule 89(1) Self-certified copies of invoices entered in Annexure-A whose details are not found in GSTR-2A of the relevant period Self-declaration regarding non-prosecution under sub-rule (1) of rule 91 of the CGST Rules for availing provisional refund
Refund of ITC unutilized on account of accumulation due to inverted tax structureDeclaration under second and third proviso to section 54(3) Declaration under section 54(3)(ii) Undertaking in relation to sections 16(2)(c) and section 42(2) Statement 1 under rule 89(5) Statement 1A under rule 89(2)(h) Self-declaration under rule 89(2)(l) if amount claimed does not exceed two lakh rupees, certification under rule 89(2)(m) otherwiseCopy of GSTR-2A of the relevant period Statement of invoices (Annexure-B) Self-certified copies of invoices entered in Annexure-B whose details are not found in GSTR-2A of the relevant period
Refund to supplier of tax paid on deemed export suppliesStatement 5(B) under rule 89(2)(g) Declaration under rule 89(2)(g) Undertaking in relation to sections 16(2)(c) and section 42(2) Self-declaration under rule 89(2)(l) if amount claimed does not exceed two lakh rupees, certification under rule 89(2)(m) otherwiseDocuments required under Notification No. 49/2017-Central Tax dated 18.10.2017 and Circular No. 14/14/2017-GST dated 06.11.2017
Refund to recipient of tax paid on deemed export suppliesStatement 5(B) under rule 89(2)(g) Declaration under rule 89(2)(g) Undertaking in relation to sections 16(2)(c) and section 42(2) Self-declaration under rule 89(2)(l) if amount claimed does not exceed two lakh rupees, certification under rule 89(2)(m) otherwiseDocuments required under Circular No. 14/14/2017-GST dated 06.11.2017
Refund of excess payment of taxStatement 7 under rule 89(2)(k) Undertaking in relation to sections 16(2)(c) and section 42(2) Self-declaration under rule 89(2)(l) if amount claimed does not exceed two lakh rupees, certification under rule 89(2)(m) otherwise 
Refund of tax paid on intra-state supply which is subsequently held to be an inter-state supply and vice versaStatement 6 under rule 89(2)(j) Undertaking in relation to sections 16(2)(c) and section 42(2) 
Refund on account of assessment / provisional assessment / appeal / any other orderUndertaking in relation to sections 16(2)(c) and section 42(2) Self-declaration under rule 89(2)(l) if amount claimed does not exceed two lakh rupees, certification under rule 89(2)(m) otherwiseReference number of the order and a copy of the Assessment / Provisional Assessment / Appeal / Any Other Order Reference number/proof of payment of pre-deposit made earlier for which refund is being claimed
Refund on account of any other ground or reasonUndertaking in relation to sections 16(2)(c) and section 42(2) Self-declaration under rule 89(2)(l) if amount claimed does not exceed two lakh rupees, certification under rule 89(2)(m) otherwiseDocuments in support of the claim

Q16. Is bunching of Refund claims across Financial Years allowed?

Answer: As per Circular No.135/05/2020 – GST dated 31st March 2020; Clarification has been issued regarding various aspects related to Refund

As per Departments previous Circular No. 125/44/2019-GST dated 18.11.2019, The applicant may file a refund application for a tax period or by clubbing successive tax periods. The period for which refund application has been filed, however, cannot be spread across the different financial years.

It has been decided to vide Circular No.135/05/2020 to remove the restriction for clubbing of tax periods across the Financial Years.

Accordingly, the circular No. 125/44/2019-GST dated 18.11.2019 has been modified to that extent i.e. the restriction on bunching of refund claims across financial years shall not apply.

Q17. Is Refund allowed if I have deposited TDS/TCS in excess of estimated liability?

Answer: Section 51 of the CGST Act and Section 52 of the CGST Act governs the TDS/TCS provisions under GST. A person registered under the said section is required to be paid Tax deducted or tax collected while discharging the liability in Form GSTR-7 or Form GSTR-8, as the case may be.

Situations where Deductor or the Collector can claim Refund:

  • Taxes so deducted or collected is deposited under the wrong head.

(For e.g. an amount deducted as Integrated Tax is deposited as Central Tax or State Tax), as a result, our Cash Ledger is showing excess balance.

In this situation, the common portal would debit the amount so claimed as a refund.

  • A situation where excess tax deducted or collected is paid while discharging the liability in the GSTR-7 or GSTR-8 and the excess amount has been credited to the electronic cash ledger of the deductee.

(a) In such a case, it can adjust the same in discharging its output liability; or

(b) Can claim a refund of the same under the category “refund of excess balance in the electronic cash ledger”.

How to file an Application for Cancellation of Registration & GST REG-16.

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CA Devesh Thakur

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