GST Refund?

What is a GST Refund?

A refund means repayment of a sum of money. In the same manner, GST Refund means repayment of excess GST liability paid by the registered person. Sometimes the situation arises when the taxpayer pays extra GST liability than the amount required to be paid. This can be due to many reasons like wrong calculation of GST or GST calculated at wrong rate etc. In those situations, the taxpayer can claim a refund of that excess amount paid from the government.

When can a refund be claimed?

A refund can be claimed by a registered person in various situations such as:

• Export of goods or services without bond or LUT.
• Zero-rated supply of goods or services under bond or LUT (only refund of ITC is available in this case.)
• Accumulated ITC in case of inverted duty structure
• Deemed export
• Balance amount available in E-Cash Ledger
• Issuance of refund vouchers
• Excess amount paid to government
• Refund to tourists under section 15 of the IGST Act 2017
• Finalization of provisional assessment
• Refund to UN Bodies etc.,
• Refund of pre-deposit
• Supply of goods or services to SEZ developer or unit
• Refund on account of any order of court, judgment, decree of Appellate Tribunal or Appellate Authority.

Calculating GST refund is not too complicated although the process to claim the refund from the government might get a little confusing at the beginning.

GST refund is nothing but the excess amount of GST liability paid to the government and so to calculate that excess amount the registered person is first required to calculate the GST liability that is payable by him for a specific period. After this simply subtract the GST liability payable from the actual amount of GST that was paid to the government. The balance or excess amount that came after subtracting those two amounts is the amount of GST Refund that can be claimed by the registered person.

However, to calculate the refund in case of export of goods or services or Inverted duty structure, specific formulas are provided in the GST law which needs to be used by the registered person for the calculation of a refund to be claimed.

How to claim GST Refund or the process of claiming GST Refund

To claim the refund of GST liability (except in case of export of goods and services and balance amount of E-Cash ledger) the following process is required to be followed:

1. File an online application along with all the required documents under form RFD 01 on the GST portal
2. If the application filed has any deficiency in it then the deficiency memo will be generated under RFD 03. In case there is no deficiency found in the application, an acknowledgment in RFD-02 will be made available to the applicant through the common portal electronically within a period of 15 days of filing of the said application.
3. The acknowledgment in RFD-02 indicates the date of filing of the refund claim and the time period of 60 days shall be counted from such date of filing
4. On receipt of refund application, a refund order will be passed by the authority within 60 days from the date of receipt of a complete application.
5. Before or while passing the refund order, the authority will check for the doctrine of unjust enrichment i.e., whether the registered person is eligible for direct refund Availment, or the refund should be transferred to the consumer welfare fund.
6. Refund will be paid to the registered person after adjustment dues under sections 54, 79, and 142 of the CGST Act 2017. For the balance amount to be paid as a refund, a payment order will be passed under RFD 05
7. The refund will be disbursed to the registered person within 60 days from the date of receipt of a complete application. In case the government fails to pay a refund within the specified period then the registered person shall be eligible for interest at the rate of 6 percent from the 61st day to the date of payment of refund.
8. In case the amount of refund to be claimed is less than rupees 1000 then no refund will be provided to the registered person.
9. The refund will be paid to the individual electronically through NEFT, RTGS, or ECS.

The time limit for claiming the GST refund

The time limit to claim the GST refund is 2 years from the relevant date. However, the relevant date varies from case to case:

 

Case of Refund	Relevant date
Export of goods by sea or air or land or post	Export of goods by sea or air or land or post When ship or aircraft leaves India or when goods pass the frontier or date of dispatch of goods by post
Export of services	Date of receipt of the amount in foreign exchange or date of invoice in case of advance payment
Zero-rated supply	End of the financial year in which such claim for refund arises
Inverted duty structure	Due date of furnishing return u/s 39 for the period in which such claim arises
Supply to SEZ	Date of payment of tax
Deemed export	The date on which return relating to such deemed export is furnished
Balance of E-cash ledger	Date of payment of tax
Refund on account of the court order	Date of communication of such order, judgment, decree
Refund in case of provisional assessment	Date of adjustment of tax after final assessment thereof i.e., date of the final assessment
Refund of excess payment	Date of payment (in case the recipient of the supply is eligible for a refund then date of receipt of goods or services)

 

A refund application shall be accompanied by the documents specified under Annexure I of Form RFD 01. The documents required are as follows:

Export of goods:

1. A statement containing the number and date of the shipping bill or bill of export.
2. Date of relevant export invoices

Export of services:

1. A statement containing the number and date of the invoice
2. Relevant bank realization certificates or foreign inward remittance certificates

Refund of ITC(Zero-rated supply and inverted duty structure): statement containing the number and date of invoice received and issued during the tax period

Supply of goods to SEZ:

1. A statement containing the number and date of invoice received and issued during the tax period
2. Evidence regarding goods admitted in full for authorized operations as endorsed by the specified officers of SEZ

Supply of services to SEZ:

1. A statement containing the number and date of invoice received and issued during the tax period
2. Evidence regarding receipt of services for authorized operations as endorsed by the specified officer of SEZ
3. Details of payment along with proof thereof made by the recipient to supplier for authorized operations

Deemed export: Statement containing number and date of the invoice along with such other particulars as may be notified on this behalf

Refund of excess payment: a statement showing details of the amount of claim on account of excess payment of tax

Refund on account of court order: Reference number of order and copy of the order

Refund on account of provisional assessment: Reference number and copy of final assessment order