GST is an indirect tax which ultimately becomes the revenue of government when the product/service is consumed by the end consumer. Government allows the GST Refund to promote the exports and to make Indian exporters competent to the global market. So, except some exceptional circumstances GST refund is applicable on the exports.
Any eligible GST registered person can apply for the GST refund as per the given timelines through the GST Portal online along with supporting documents. The whole process is standardized, online and bound by the time limit to process the refund claimed.
Following are the scenarios where GST Refund is applicable:
1. Refund of unutilized input tax credit (ITC) on account of exports without payment of tax;
2. Refund of tax paid on export of services with payment of tax;
3. Refund of unutilized ITC on account of supplies made to SEZ Unit/SEZ Developer without payment of tax;
4. Refund of tax paid on supplies made to SEZ Unit/SEZ Developer with payment of tax;
5. Refund of unutilized ITC on account of accumulation due to inverted tax structure;
6. Refund to supplier of tax paid on deemed export supplies;
7. Refund to recipient of tax paid on deemed export supplies;
8. Refund of excess balance in the electronic cash ledger;
9. Refund of excess payment of tax;
10. Refund of tax paid on intra-State supply which is subsequently held to be inter-State supply and vice versa;
11. Refund on account of assessment/provisional assessment/appeal/any other order;
12. Refund on account of “any other” ground or reason
Time Limit to apply for the GST Refund: GST refund application needs to be filed within 2 years from the relevant date. Relevant date is provided under section 54 of CGST Act which is summarized hereunder.
|Reason for claiming GST Refund||Relevant Date|
|Excess payment of GST||Date of payment|
|Export or deemed export of goods or services||Date of dispatch/loading/passing the frontier|
|ITC accumulates as output is tax exempt or nil-rated||Last date of financial year to which the credit belongs|
|Finalization of provisional assessment||Date on which tax is adjusted|
With effect from 26 Sept, 2019 as per circular no. 125/44/2019-GST, GST Refund process is fully digitalized & the necessary capabilities for making the refund procedure is fully electronic, in which all steps of submission and processing shall be undertaken electronically, have been deployed on the GST Portal. The Refund applications shall be filed in the form GST RFD-01 on the GST Portal along with supporting documents as attachments. List of the supporting documents as per the category of the GST refund are also given in the circular no. 125/44/2019 itself. Refund sanctioned shall be disbursed through the PFMS (Public Financial Management System) after validating the bank detail of the registered person.
Other Important Points for GST Refund:
1. ITC of Capital Goods: ITC taken on the capital goods is not eligible for refund even in case of 100% exports.
2. Mistakenly Filed NIL GST Refund Application: Several registered personnel have filed the NIL GST Refund application for certain period in a certain category although they were eligible to GST refund for the specified period & category. Now these people can claim the GST refund by filing GST Refund under the “Any Other” category according the circular no. 110/29/2019 – GST if satisfy the conditions mentioned in that circular.
About the Author
Author is Modhu Khyalia, Partner with SC Bhagat & Co. a leading chartered accountancy firm rendering comprehensive professional services with its office in Karol Bagh. Modhu Khyalia, with an experience of more than 5 years who is an expert in providing tax and statutory compliance services & advisory services related to GST, Income Tax, TDS, Corporate Tax, Foreign Taxation, PF, ESI, Helping start-ups in incorporation formalities, FDI, Implementation of ERP and designing various types of management reports for better decision making.