The difference between Export of Services on payment of integrated tax (and claiming refund of the same) and without payment of integrated tax (i.e. claiming refund of input tax credit) is tabulated as follows: 

  Particular Export with payment of Tax Export without payment of Tax
1 Procedure required to be undertaken by the company for claiming refund on export of services

 

a. The company is required to make an application for refund of Integrated Tax on export of services, shall file Form GST RFD 01A (as per Rule 96(9) read with rule 89 of CGST Rules, 2017.)

 

 

a. The company is required to make an application for taking letter of undertaking (LUT) in Form GST RFD11 to the jurisdictional Commissioner.(as per Sub rule (1) of Rule 96A of CGST Rules, 2017)

b.Further the company , required to make an application for refund of Integrated Tax on export of services, shall file Form GST RFD 01 (as per Rule 96(9) read with rule 89 of CGST Rules, 2017.)

c. If payment of exported services made under LUT or bond is not received by the company in convertible foreign exchange [or in Indian rupees, wherever permitted by the Reserve Bank of India] within fifteen days after the expiry of one year from the date of issue of the invoice for export the company is liable to pay due tax with interest.( as per RULE 96A read with sub-section (1) of section 50)

2 Application of refund Application of refund of integrated tax is required to be made to Jurisdictional officer (as per notification no. 10/2018-CT dated 23/01/2018) Application of refund of integrated tax is required to be made to Jurisdictional officer
3 Documents required to be attached with refund claim Following document required to be attached (as per Circular No. 37/11/2018-GST dated 15-03-2018) are as follows:-

a. Copy of Form RFD-01A filed on common portal

b. Copy of statement 2 (details of export invoices with relevant BRC) of Form RFD-01Ac.

c. Statement containing the number and date of invoices i.e. input, input services and capital goods in specified format as Annexure A

d. Bank Realisation Certificates or Foreign Inward Remittance Certificates.

e. Undertaking /declaration in Form RFD-01A.

 

Following document required to be attached (as per Circular No. 37/11/2018-GST dated 15-03-2018) are as follows:-

a. Copy of Form RFD-01A filed on common portal

b. Copy of statement 3A (details of accumulated ITC of input services and goods)of Form RFD-01A generated on portal.

c. Copy of statement 3 (calculation of maximum refund amount )of Form RFD-01A

d. Statement containing the number and date of invoices i.e. input, input services and capital goods in specified format as Annexure A (invoice wise details.)

e. Bank Realisation Certificates or Foreign Inward Remittance Certificates.

f. Undertaking /declaration in Form RFD-01A.

4 Unjust enrichment Unjust enrichment is not required to be complied with for refund of integrated tax on export of services (as per section 54(8)(a) of CGST Act,2017) Unjust enrichment is not requiredto be complied with for refund of integrated tax on export of services
5 Relevant date for claiming refund(i.e. the company is eligible to claim refund within 2 years from the relevant date) Relevant date for refund of taxes on export of services (as per clause (c )(i) of explanation attached to section54(14)) are as follows: 

a. The date on which amount if foreign exchange received or in Indian Rupee as permitted by RBI, by the company.

b. In case of advance received , relevant date will be date of issue of invoices.

 

Relevant date for claiming of refund of unutilised input tax credit shall be end of financial year. (as per clause (2 )(e) of explanation attached to section54(14)) 

For example: Supplies made for the Otcober-18 to december-18. Refund can be claimed only after March-2019 

With effect from 1st Feb 2019 

Relevant date for refund of taxes on export of services 

a. The date on which amount if foreign exchange received or in Indian Rupee as permitted by RBI, by the company.

b. In case of advance received, relevant date will be date of issue of invoices.

6 Frequency of filling refund The company can file refund invoice wise. The company can file refund monthly or quarterly or by clubbing successive month/ quarter. However, the company can not club the months or quarter having different financial year. (As per circular No. 37/11/2018-GST dated 15/03/2018) 

For example: Supplies made for the October-18 to december-18. Refund can file refund claim even for the month October-18 individually or for October-18 to december-18. 

7 Input tax credit on capital goods The company eligible to take Input tax credit on capital goods The company ineligible to take Input tax credit on capital goods
8 Maximum amount of refund

 

 

 

 

 

a. Full amount of Integrated tax paid by the company on export of services will be received after filling Form GSTR RFD 01A with complete documents. a. Proportion in which refund will be granted to the company as per Sub rule (4) of Rule 89 is:

Maximum Refund Amount= (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) x Net ITC ÷Adjusted Total Turnover 

Adjusted Total Turnover= A+B-C-D 

(A) Turnover related to goods:-

All taxable supplies (Excluding purchases on which tax is paid under RCM) + exempt sales +export of goods and services – central tax -state tax -integrated tax -cess- turnover of services.

(B) Turnover related to services:-

Non-zero rated service + Turnover of zero-rated supply of services 

Note: Turnover of zero-rated supply of services = amount received and services completed + services completed in current period however advance received in prior period – advance received and services not completed- zero rates supply made with payment of tax. 

(C)  Value of exempt supply other than Zero-rated supplies 

(D) Turnover of supplies for which refund is claimed under sub-rule (4A) and (4B). 

9 Quantum of refund Full amount of Integrated tax paid by the company on export of services will be received after filling Form GSTR RFD 01A with complete documents.

 

Lowest of three will be refundable to the company (As per Circular Number 59/33/2018-GST dated 04-09-2018):- 

a. Maximum refund amount as mentioned above in point 8.

b. Balance in electronic credit ledger for the end of period for which refund is claimed. For example, if refund is related to Jan, 2018 to Feb, 2018. Balance available on 28th Feb 2018 will be taken into consideration.

c. Balance in electronic credit ledger at the time of filling refund. i.e. if refund application is made on 17thmay, 2019 for the period Jan, 2018 to Feb, 2018. Balance available on 17thmay, 2019 will be taken into consideration.

9 Working capital requirement More working capital will be required by the company since the company is required to pay full amount of integrated tax at the time of export, however it will take some time to receive the refund.  Only input tax credit on input used by the company on export of services will be blocked till the time refund is received by the company. Thus, less working capital is required.

(Republished with amendments)

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Qualification: CA in Practice
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Location: Mumbai, Maharashtra, IN
Member Since: 16 May 2019 | Total Posts: 1

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