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GST Act provides for refund of unutilized input credit or tax paid or tax paid on inward supplies under certain circumstances. In this article we will be discussing the circumstances in which refunds under GST are available, the conditions to be complied with and the procedures for the same.
Under what circumstances is a refund available?
Refund of unutilized input credit can be claimed at the end of any tax period only in the following cases:
- Unutilized input credit where the rate of taxes on inward supply is higher than rate of tax on the outward supply (Inverted rated supplies)
- Unutilized input credit where exports of goods or services or both were made without payment of IGST
Refund of tax paid can be claimed at the end of any tax period only in the following cases:
- Exports of goods or services or both on payment of IGST
- Tax paid on deemed export of goods
- Excess payment of tax
- Payment of tax on a provisional basis
- Advance tax paid by a Casual Taxable Person or Non Resident Taxable Person
- CGST and SGST/ UTGST paid on intra state supply but held as inter state supply
Refund arising as a result of:
- Finalisation of provisional assessment
- Order of an appellate authority in favour of the taxpayer
- No/Less tax liability arising at the time of finalization of investigation procedures
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:
- Application must be made within 2 years from the relevant date
- GSTR 3 for the relevant tax period should have been filed
- The outward supplies are not nil rated or exempt
- 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
- In case of Casual Taxable Person or Non Resident Taxable Person, all monthly returns have been filed during the period of registration
- 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]
What is the relevant date for each circumstance of the refund?
What is the procedure for refund?
- File for GST RFD 01 along with the required documents in Annexure 1 to the form.
- The assesse 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.
- 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.
- 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.
- The order has to be passed within 60 days from the date of receiving a complete application.
- 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.
What are the documents required in Annexure 1 of GST RFD 01?
What are the other documents for filing the application in GST RFD 01?
Apart from the documents required in Annexure 1 of GST RFD 01, the following documents are required to be filed along with the application in GST RFD 01:
- A declaration to the effect that the incidence of tax, interest or any other amount claimed as refund has not been passed to any other person where the refund claimed does not exceed INR 2,00,000
- A Certificate in Annexure 2 issued by a Chartered Accountant or Cost Accountant to the effect that the incidence of tax, interest or any other amount claimed as refund has not been passed to any other person where the refund claimed exceeds INR 2,00,000
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:
1. In case of export supplies
Refund Amount = (Export turnover * Net ITC) / (Total Turnover – Exempt Turnover)
2. 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
What are the conditions and procedures for claiming refund in the case of export of goods on payment of IGST?
The conditions for claiming refunds in case of export of goods on payment of IGST are:
- The person in charge of the conveyance carrying the export goods duly files an export manifest or an export report covering the number and the date of shipping bills or bills of export
- The exporter has filed a valid GSTR 3
Once the GSTR 3 is filed, the system designated by the Customs are required to refund the amount equal to the IGST paid on export.
Is there a provision of paying interest on delayed refunds?
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.
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.
Are there any other circumstances under which refund under GST is allowed?
Refund of tax paid on inward supplies by the following:
- A specialised agency of the United Nations Organisation
- Any Multilateral Financial Institution and Organisation notified under the United Nations (Privileges and Immunities) Act, 1947
- Consulate or Embassy of foreign countries
What are the conditions and procedures for claiming refund in the above circumstances?
The conditions for claiming refunds in the above circumstances are that the inward supplies of goods or services or both were received from:
- a registered person
- against a tax invoice with the name and GSTIN of the supplier
- price covered under a single tax invoice is more than INR 5,000 excluding tax paid
The above mentioned persons shall file an application in form GST RFD 10 on every quarter within six months from the end of the quarter, along with a statement of inward supply of goods or services or both in GSTR 11. The statement in GSTR 11 should be matched with GSTR 1 filed by the corresponding suppliers.
Is a refund of IGST paid by an International Tourist available?
Yes. Refund of IGST paid by an International Tourist 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.
Tourists 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 ti overseas diplomatic posts
- Children born in India to Foreign Nationals during their stay in India