GST Refund in Case of Exports & Refund of Input Tax Credit in India

GST Refund: Usually when the GST paid is more than the GST liability a situation of claiming GST refund arises. A person can claim refund under section 54 of CGST Act 2017 with relevant Refund rules (Rule No. 89 to 96A). Under GST the process of claiming a refund is standardized to avoid confusion. The process is online and time limits have also been set for the same.

Who can the GST  Refund Claimed

There are many cases where refund can be claimed under GST which is as follow:

1. Export of goods or services.

2. Supplies to SEZs units and developers.

3. Deemed exports.

4. Refund of taxes on purchase made by UN or embassies etc.

5. Refund arising on account of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court.

6. Refund of accumulated Input Tax Credit on account of inverted duty structure other than Nil rated or fully exempt supplies.

7. Finalisation of provisional assessment.

8. Refund of pre-deposit.

9. Excess payment due to mistake.

10. Refunds to International tourists of GST paid on goods in India and carried abroad at the time of their departure from India.

11. Refund on account of issuance of refund vouchers for taxes paid on advances against which, goods or services have not been supplied.

12. Refund of CGST & SGST paid by treating the supply as intra-State supply which is subsequently held as inter-State supply and vice versa.

Time Limit for Claiming the GST Refund

An application of GST Refund shall be filed online in Form GST RFD 01 and shall be filed within a maximum period of Two Years from the Relevant Date.

Relevant Date for filing GST RFD 01

 Relevant Date would be different in different Cases and the same and the same has been mentioned below;

Reason For Claiming  GST Refund	Relevant Date for Claiming  GST Refund
Goods are exported through Air or Sea	Date on which the Ship / Aircraft leaves India
Goods are exported by a land vehicle	Date on which the Goods cross the land frontier of the country
Goods are exported through post	Date of dispatch of goods from the Post Office
Supplies include services which are completed before the receipt of payment	Payment Receipt Date
Services are performed after the receipt of Advance	Invoice Date
Refund claim made for excess Input Tax Credit Unutilised	End of the Financial Year for which the refund claim is being made
Goods are supplied for deemed exports i.e. supply to SEZ or 100% EOU	Return filing date relating to such deemed Exports
Refund arises due to an order passed in favour of the appellant	Date of such order
When the person claiming the refund is not the Supplier	Date on which the goods are received by such person
All other cases	Date of Payment of Tax

GST Refund Claim on Exports

One of the major categories under which, claim for GST refund arises is export. Exports (whether of goods or services) as well as supplies to SEZs have been categorised under GST as Zero-Rated Supplies. Because the supply is zero-rated, the supplier can claim refund of input tax credit paid.

Currently, exporters can claim refund on zero-rated supplies under two options. Either the exporter can export under Bond/ LUT and claim refund of accumulated Input Tax Credit or he may export on payment of integrated tax and claim refund. However, both the methods and delays in processing GST refunds have adversely impacted the working capital cycle of many businesses. Hence, the Government has announced the creation of a e-wallet facility for exporters to quicken and streamline the GST refund process.

Documents Required for GST Refund

The GST RFD 01 shall be accompanied by the following documentary evidences, as applicable, in Annexure 1:-

1. The reference number of the order and a copy of the order passed by the proper officer or an appellate authority or appellate tribunal or court resulting in such refund or reference number of the payment of the amount claimed as refund, or

2. A statement containing the number and date of shipping bill or bills of export and the number and the date of relevant export invoices, in a case where the refund is on account of export of goods, or

3. A statement containing the number and date of invoices and the relevant bank realisation certificates or foreign inward remittance certificates, as the case may be, in a case where the refund is on account of export of services, or

4. A statement containing the number and date of invoices along with the evidence regarding the endorsement in the case of supply of goods made to a SEZ unit or a SEZ developer.

5. A statement containing the number and date of invoices, the evidence regarding the endorsement specified and the details of payment, along with the proofs thereof, in a case where the refund is on account on account of supply of services made to a SEZ unit or a SEZ developer.

6. A declaration to the effect that the SEZ unit or the SEZ developer has not availed the input tax credit of the tax paid by the supplier of goods or services or both, in a case where the refund is on account of supply of goods or services made to a SEZ or a SEZ developer.

7. A statement containing the number and date of invoices along with such other evidence as may be notified in this behalf, in a case where the refund is on account of deemed exports, or

8. A statement containing the number and the date of the invoices received and issued during a tax period in a case where the claim pertains to refund of any unutilised input tax credit where the credit has accumulated on account of the rate of tax on the inputs being higher than the rate of tax on output supplies, other than nil rated or fully exempt supplies, or

9. The reference number of the final assessment order and a copy of the said order in a case where the refund arises on account of finalisation of provisional assessment, or

10. A statement showing the details of transaction considered as intra-state supply but which is subsequently considered as inter-state supply, or

11. Statement showing the details of the amount of claim on account of excess payment of tax

Chartered Account Certificate for GST Refund

If a GST refund claim is less than Rs. 2 Lakhs, then a self-declaration of the applicant must be submitted to the effect that the incidence of tax has not been passed to any other person along with other documents listed below. For GST refund claims exceeding Rs. 2 Lakhs, a certificate from a Chartered Accountant/ Cost Accountant must be submitted along with the documents below.

GST Refund for Exports

If a refund claim is made on account of exports or supply to SEZ, the relevant invoice pertaining to the transaction must be submitted. Along with the invoice, a statement containing the number and date of shipping bills or bills of export and the number and the date of the relevant export invoices, in a case where the refund is on account of export of goods must also be provided.

In case of GST refund on account of export of services, along with the tax invoices, the relevant bank realisation certificates evidencing receipt of payment in foreign currency is also required to be submitted.

GST Refund for Exports Without Payment of IGST

In the case of exports of goods or services or both without the payment of tax on submission of Bond/LUT, the refund of input tax credit shall be granted as per the following formula:-

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

Where,

• “Refund amount” means maximum refund that is admissible.
• “Net ITC means input tax credit availed on inputs and input services during the relevant period;
• “Turnover of zero rated supply of services” means the value of zero rated supply of services made without payment of tax under bond or LUT;
• “Turnover of zero rated supply of services” means the value of zero rated supply of services;
• “Adjusted total turnover” means the turnover excluding the value of exempt supplies other that zero rated supplies, during the relevant period;
• Relevant period means the period for which the application for refund has been filed

GST Refund for Supply to SEZ

If a GxST refund claim is made by the supplier to an SEZ unit, an endorsement from the Proper Officer evidencing receipt of such goods/ services in the SEZ should be submitted along with the tax invoice. Further, a declaration is also required from the SEZ unit to the effect that they have not availed input tax credit of the tax paid by the supplier. If the claim is for

GST Refund for Accumulated Input Tax Credit

If the GST refund claim is for accumulated input tax credit, only a statement containing invoice details as prescribed in the GST refund rules must be submitted. Its important to note that no refund of unutilised input tax credit will be allowed on CGST and IGST paid, in case of supply of services for construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly.

Also, no refund of unutilised input tax credit will be allowed for CGST and IGST, where the credit has accumulated on account of GST rate of tax on inputs being higher than the rate of tax on output supplies.

OTHER RELEVANT POINTS

• No refund shall be issued in case the amount of refund is less than Rs. 1,000
• In cases where the application for GST Refund relates to refund of Input Tax Credit, the electronic ledger shall be debited by the applicant by an amount equal to the refund so claimed.
• Any claim for GST Refund relating to balance in the Electronic Cash Ledger may be made through the return furnished for the relevant tax period in Form GSTR 3 or Form GSTR 4 or Form GSTR 7.
• In case of Refund due to Casual Taxable Person or to a non-resident taxable person on account of advance tax deposited, such refund shall not be granted unless such person has filed all returns for the entire period for which the certificate of registration was granted to him.

Disclaimer :

The contents of this article are solely for information and knowledge and does not constitute any professional advice or recommendation. Author does not accept any liability for any loss or damage of any kind arising out of this information set out in the article and any action taken based thereon.