What Is The Refund Process In GST by Consult my Tax

What is GST Refund?

GST Payment is refunded when the GST paid is more than the GST Liability. Under the GST regime, the Government provides a hassle- free refund process. The GST Refund process is online and less time consuming.

When it can be claimed?

There are many situations where GST Refund can be claimed. Some of these are –

1. Exports (including deemed exports) of goods/ and services.
2. Accumulation of ITC due to output tax being nil or exempted from tax
3. Excess payment of tax due to omission or misinterpretation
4. Finalization of provisional assessment
5. Refund of GST paid by foreign or international tourists
6. Refund of GST paid on purchases made by Embassies or UN bodies
7. Accumulation of credit due to the output tax being lesser than input tax.
8. Refund of pre- deposit
9. Supplies to SEZ units
10. Refund arising on account of decree, order or judgment of the Appellate Tribunal or court.

How is GST Refund calculated?

Let’s take an example –

Mr. Bhatia’s GST liability for the month of September is?40,000. But due to mistake, Mr. Bhatia made a GST payment of?4 lakhs.

Now Mr. Bhatia has made an excess GST payment of?3, 60,000 which can be claimed as a refund by him within 2 years from the date of payment.

What is the time limit for claiming the refund?

The time limit for claiming a refund is 2 years from the relevant date.

The relevant date is different for every situation –SITUATIONRELEVANT DATEExcess payment of tax due to omission or mistakeDate of payment of taxDeemed exports of goods/ and services i.e., goods or services supplied to SEZ or 100% EOUDate of filing returnGoods exported through air or seaDate on which ship or aircraft leaves IndiaGoods carried by land vehicleDate on which the goods cross the land frontier of the countryGoods sent through postDate of dispatch of goods from the post officeAccumulation of ITC due to output tax being nil or exempted from taxLast date of financial year to which the credit belongsFinalization of provisional assessmentDate on which tax is adjustedWhere the service supplied is completed before the receipt of paymentDate on which the payment is receivedWhere the services are performed after receipt of an advanceDate of invoiceWhere the person claiming fund is not the supplierDate on which goods are received by such person

Refund arising due to order passed in favor of the appellant.

Date of such order

All other cases

Date of payment of tax

Also, any failure to file refund application by the taxpayer within specified time can lead to blockage of credit.How to claim GST refund?

• The refund application has to be made in Form RFD- 01 within 2 years from relevant date. This means that if excess GST is paid in the month of December 2018, GST refund application can be submitted until December 2020. This form can be submitted online on the GSTN portal and should also be certified by a Chartered Accountant.
• Once the application is submitted, an acknowledgment in form RFD- 02 will be auto- generated for future references. This acknowledgement will be sent through Email and SMS.
• In case of any deficiency in the refund application, form RFD- 03shall be sent to the taxpayer to correct the application.

In case of refund due to Zero rated Supplies i.e., exports, the GST officer shall sanction the 90% of the amount of GST refund on provisional basis within 7 days.

This refund shall be issued in formRFD- 04 within 7 days from the date of acknowledgement. In this case, the acknowledgement will be issued within the period of 3 days.

The provisional fund shall not be granted to a person who has prosecuted for evading tax of more than?250 lakhs over a period of 5 years.

• A GST refund payment advice is made in form RFD- 05 which shall be credited electronically to any of the bank accounts mentioned by the applicant in his registration particulars and refund application.
• The final order of the refund shall be made in Form RFD- 06within a period of 60 days from the application date. If there is any delay in passing the final order by the GST officer, an interest of 6% will be payable to the taxpayer along with the refund amount for the period exceeding the expiry of 60 days until the receipt of the refund.
• Other important forms to claim GST refunds –

1. RFD- 07 – It shows cause notice for the complete rejection of the refund application. No application shall be rejected without giving the applicant an opportunity of being heard.
2. RFD- 08 – It is a notice to show that whole or any part of the amount claimed as refund is not payable to the applicant
3. RFD- 09 – The applicant has to reply to such notice in this form within a period of 15 days of the receipt of such notice.

Where the person filing the claim is a United Nation’s Body, or a foreign embassy, then the refund application has to be filed within 90 days from the end of the quarter for which the goods or services were acquired. This application shall be made in form RFD- 10.

Refund Process under GST :

In order to claim a refund, the following procedure must be followed:

1. Visit the GSTN portal –www.gst.gov.in and fill in the application form meant for claiming refund.

1. You will receive an acknowledgment number, after filing the application electronically, through an email or SMS.
2. The cash and return ledger will be adjusted and the "carry-forward input tax credit" will be reduced automatically.
3. The refund application along with the documents submitted will be scrutinized by the authorities with a 30-day period after filing the refund application.
4. The issue of "Unjust enrichment" will be thoroughly scrutinized by the authorities for each refund application. In case the application does not qualify, the refund will be transferred to a Consumer Welfare Fund (CWF).
5. In case the refund claimed by the individual crosses the predetermined amount of refund, a pre-audit process will be conducted before the refund is sanctioned.
6. The credit of the refund will be done electronically to the applicant’s account via. NEFT, RTGS or ECS.
7. Individuals are allowed to make their applications for refund at the end of each quarter.
8. In case the amount of refund is below?1000, no refund will be provided to the individual.

GST Refund of Input Tax Credit :

GST Refund of ITC arises in following 3 cases –

1. Due to output tax being nil or exempted from tax
2. Due to the output tax being lesser than input tax.
3. In case of partial reverse charge, where the ITC cannot be used completely against the output tax.