How to apply for GST Refund on Account of Export of Services (With Payment of Tax)

Author: Finac Books

The day GST has come in implementation in India, so many exporters did face difficulties in claiming their GST Refunds. The outcome that comes in the picture due to this is capitals being locked up till they apply for refunds correctly and refunds being received. The procedure of applying for GST Refunds for Services Exporters is more complex as compared to GST Refunds for Goods Exporters. Let’s first discuss "What is an Export of Services?" Export of services has a quite different definition as it can be referred to as the supply of services where the Supplier is in India and the Recipient is outside India, and payment received for such a service in convertible foreign exchange.

All the exporters of services are affected by this process of refunds in India, including the companies which are providing services like back-office support, software, etc. to their parent companies overseas.

GST Refunds process holds a difference for a manufacturer and for a services exporter. Manufacturers get a simpler process for GST Refunds while Services Exporters cannot get direct GST Refunds to their bank account. A Service Exporter needs to file some certain documents with the commanding GST Officer of the company. This differentiation is made because services are abstract and no documentation of exports. A proof of realization (i.e. funds being received) is necessary for GST refunds on service exports.

Now let’s talk about the "Documents required to claim a GST Refund by a Service Exporter!"

This process is done on Offline Basis. So below are the documents you need for filing a GST Refund:

  • A Covering Letter
  • Export Invoices
  • Bank Realization Certificates or Foreign Inward Remittance Certificates
  • Application for Refund in the form GST RFD 01
  • Form GSTR 3B and Gstr 1
  • A cancelled cheque
  • If GST Refunds claims exceed 2 lakhs (200,000 or ~$3,000) per quarter, a certificate from CA/ Cost Accountant must be submitted along with the documents above.

Now the main component of this topic

"How to Apply for GST Refunds for Services Exporters?"

The process includes several steps that are supposed to be followed by any exporter and those steps are as follows:

STEP-1: The application form of GST Refunds duly filled by the Exporter is to be submitted to the proper officer with the documents we’ve listed above. It must have the statement containing the number and date of invoices and relevant bank realization certificates or foreign inward remittance certificates. The officer will, within three days of submission the application, issue an acknowledgement in form GST RFD-02

STEP-2: The officer shall make an order in the form GST RFD-04, providing the amount of refund on a provisional basis within 7 days.

STEP-3: The officer shall issue payment instructions in form GST RFD-05 to be transferred online to the bank accounts of the applicant as mentioned in the application form. 90% of amount will be credited at this point.

STEP-4: The remaining 10% of the amount is credited after the authentication of documents physically with the online data provided in the GST Portal. If all the details are fine, then the Form GST RFD-06 shall be issued in sanctioning the remaining amount.

One question that will come to several exporters’ heads and that is when the claim for GST Refunds should be filed? And the answer is:

Every claim is supposed to be submitted within the expiry of 2 years from the convenient date of export. For service exporters, a convenient date can be:

  • The date on which the service has been completed, or
  • The date mentioned on the advance receipt. In some cases, the advance is collected before the date invoice has been issued.