The Goods and Services Tax (GST) system in India provides taxpayers with an efficient and transparent mechanism to manage their tax obligations. One crucial aspect of this system is the Electronic Cash Ledger, which records all payments made by a taxpayer towards taxes, penalties, fees, and other dues.
Page Contents
What is Electronic Cash Ledger?
The Electronic Cash Ledger contains a summary of all the deposits/payments made by a taxpayer. It can be accessed under the post-login mode on the GST portal under Services > Ledgers > Electronic Cash Ledger. Any person, or a person on his behalf, shall generate a challan in FORM GST PMT-06 on the common portal and enter the details of the amount to be deposited by him towards tax, interest, penalty, fees or any other amount.
Reason for Excess Amount in Cash Ledger:
Maintaining a balance in your Electronic Cash Ledger is necessary to meet GST obligations, sometimes the balance may accumulate more than what is immediately required. Common reasons for an excess balance in the Electronic Cash Ledger are:
a. Excess Payment of Tax due to mistake or inadvertence
b. TDS or TCS Credit(Circular no. 166/22/2021-GST dated 17th Nov 2021 Vide sr. no.3, it has been clarified that TDS/TCS credited to the electronic cash ledger under the provisions of section 51/52 of the CGST Act and lying in balance, can be refunded as excess balance in cash ledger as the same is equivalent to cash deposited in electronic cash ledger.)
In case of incorrect mention of nature of tax (CGST / SGST / IGST) or GSTIN, the tax administration is required to verify the correctness of the taxpayer’s claim and therefore the taxpayer may file a refund application which should be decided within a period to be prescribed by the GST Law.
Where the amount has been mentioned wrongly, the refund of excess amount of tax, at the option of the taxpayer, would either be automatically carried forward for adjustment against future tax liabilities or be refunded on submission of application by the taxpayer. The automatic carry forward would be allowed if the excess payment was made against a return and not against any other liability.
What is GST Refund?
Refund has been discussed in section 54 of the CGST/SGST Act. “Refund” includes
(a) any balance amount in the electronic cash ledger so claimed in the returns,
(b) any unutilized input tax credit in respect of (i) zero rated supplies made without payment of tax or, (ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies),
(c) tax paid by specialized agency of United Nations or any Multilateral Financial Institution and Organization notified under the United Nations (Privileges and Immunities) Act, 1947, Consulate or Embassy of foreign countries on any inward supply.
The mechanism for refunding the balance in the electronic cash ledger is outlined in several key sections of the GST Act:
Section 49(6)– The said provision lays down that the balance in the electronic Cash Ledger may be refunded in accordance with the provisions of section 54 of the CGST Act.
Time Period to Claim GST Refund:
As per Circular no. 166/22/2021-GST dated 17th Nov 2021– Sr no.1 of the clarification issued vide the said Circular, the provisions of sub-section(1) of section 54 of the CGST Act regarding time period. Accordingly time limit would not be applicable in cases of application of refund of excess balance in electronic cash ledger. It has also been clarified that unjust enrichment clause is not applicable in such cases.
Process to Claim Refund of Excess Balance in Electronic Cash Ledger?
In the GST regime there is a standardized form for making any claim for refunds. The claim and sanctioning procedure are completely online and time bound which is a marked departure from the erstwhile time consuming and cumbersome procedure.
To initiate the refund process, taxpayers need to follow these steps:
1. Login to GST website using credentials (https://www.gst.gov.in/)
2. Navigate to Services > Refunds > Application for Refund
3. On the Select the refund type page, select the reason as Excess balance in the Electronic Cash Ledger option.
4. Click on CREATE REFUND APPLICATION.
5. The GST RFD-01 – Excess balance in the Electronic Cash Ledger page is displayed.
6. Balance amount available in Electronic Cash Ledger is auto-populated in Form GST RFD-01.
7. Enter the amount of Refund to be claimed for Integrated Tax, Central Tax, State/ UT Tax and Cess in table “Refund Claimed”. The amount of refund to be claimed cannot be more than the balance amount available in Electronic Cash Ledger.
8. You can view your Electronic Liability Ledger for details about any outstanding dues.
9. Select the Account Number from the Select Account Number drop-down list, ensuring it matches the bank account where the refund will be credited.
10. Upload supporting documents such as payment receipts, challans, or other proof. You can upload up to 10 documents, each with a maximum size of 5 MB.
11. Enter the Document Description, Click the ADD DOCUMENT to upload.
12. Click the Delete button, in case you want to delete any document.
13. Click the SAVE button.
14. A confirmation message will appear stating that “Your application has been saved. You can retrieve this application and submit within 15 days from today. You can access the Application from Services > Refunds > My Saved/Filed Applications and file on the GST Portal.”
15. Click the PREVIEW button to download the form in PDF format.
16. Click the PROCEED button.
17. Select the Declaration checkbox.
18. Choose the Name of Authorized Signatory from the drop-down list
19. Click FILE WITH DSC or FILE WITH EVC to verify and submit the application. You can verify using a digital signature (DSC) or an OTP (EVC).
20. The success message is displayed and status is changed to Submitted. Application Reference Number (ARN)receipt is downloaded and also sent on your e-mail address and mobile phone number. A PDF receipt with the ARN can be downloaded.
Important Notes:
1. Acknowledgement in FORM GST RFD-02 will be issued if the application is found complete in all respects.
2. As soon as the Refund application filed GST Portal makes a Debit entry in the Electronic Cash Ledger for the amount claimed as refund.
3. Filed applications (ARNs) can be downloaded as PDF documents using the My Saved/Filed Applications option under Refunds.
4. Filed applications can be tracked using the Track Application Status option under Refunds.
5. Once the ARN is generated on filing of refund application in Form RFD-01, the refund application along with the documents attached while filing the form would be assigned to Refund Processing Officer for processing the refund.
6. The application will be processed and refund will be disbursed by the Jurisdictional Authority after scrutiny.
7. The disbursement is made once the concerned Tax Official processes and sanctions the refund application.
8. Aadhar authentication is mandatory before filing a refund application.
9. There is no minimum limit restriction for refund of excess amount in Electronic Cash Ledger.
10. As per Circular No. 166/22/2021-GST Furnishing of certification/ declaration under Rule 89(2)(l) or 89(2)(m) of the CGST Rules, 2017 for not passing the incidence of tax to any other person is not required in cases of refund of excess balance in electronic cash ledger as unjust enrichment clause is not applicable in such cases.
Thus the refund process for excess amounts in the Electronic Cash Ledger is a vital feature of the GST system, allowing taxpayers to efficiently claim back funds that are not required for immediate tax liabilities, which can help to smoothen the working capital.
Author Bio
