GST Refund Procedure

In the GST once paid can be claimed back. There are circumstances where GST paid to the government can be claimed back. There is set procedure which is totally online where a registered person can file and claim back the GST.

Two important aspect of GST Refund:

1. That under which circumstances it can be claimed back as prescribed in Section 54 and Section 55 of the CGST ACT,2017.
2. What is the procedure to claim it.

Circumstances when GST can be claimed Back:

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 relevant date.
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 refund of unutilised Input Tax Credit at the end of any tax period
4. Export of goods or service or both on payment of IGST
5. Tax paid on deemed export
6. Payment of tax on 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.
10. Other cases – refund is available for:

• Finalisation of provisional assessment.
• Favourable order of an appellate authority, in favour of any taxpayer.
• Finalization of investigation procedures -No/Less tax liability arising thereof.
• Refund of tax paid wrongly e. IGST paid instead of CGST/SGST or vice versa

11. Refund to international tourist – Where an international tourist procured goods in India, while leaving the country seek 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:

• Persons 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.

What are the conditions for claiming refund in all the cases except export of goods on payment of IGST?

The conditions for claiming refund in all the cases except 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 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 have been availed

5. In case of Casual Taxable Person or Non Resident Taxable Person, all monthly returns have been filed during the period of registration

6. In case of  CGST and SGST/ UTGST  paid on intra state 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]

Documentation for Refund Application:

• Documents evidencing tax, interest or any other amount paid, Copy of proof of deposit of tax and invoices and Documents evidencing export should be attached with refund application.

Where the refund claimed is less than Rs. 2 Lakh – 

• The applicant need not furnish Documentary evidences and instead can file a declaration based on available evidences.

What is the procedure for refund?

1. File for GST RFD 01 along with the required documents in Annexure 1 to the form.
2. The assessee shall receive an acknowledgement 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 acknowledgement 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 advise 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 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 acknowledgement provided the supplier was not prosecuted in the 5 years immediately preceding the refund period.

How is the refund amount calculated for export supplies and inverted rated supplies?

The refund for export supplies and inverted rated supplies are calculated as shown below:

• In case of export supplies 

Refund Amount = (Export turnover * Net ITC) / (Total Turnover – Exempt Turnover)

• In case where rate of taxes on inward supply is higher than rate of tax on the outward supply (Inverted rated supply)

Refund Amount = ((Turnover of the inverted rated supply * Net ITC) / (Total Turnover – Export Turnover) – Tax payable on the inverted rated supply 

Is there a provision of paying interest on delayed refunds?

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.