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With the practical experience since GST come into force, there are some Frequently Asked Question by client as well as professional on the matter of GST refund, the article explains some practical question and answer in a commonly used terminology:

GST Refund is a process in which, taxpayers can claim amount on eligible circumstances, if any, as refund from the GST authority. They can claim after submitting a refund application with the necessary details in the GST portal. Section 54 to 58 of CGST Act, 2017 deals with refund and relevant Rules are 89 to 96A and relevant forms are RFD-01 to RFD-11.

Q 1. What can be claim as refund?

Tax, Interest on such tax and any other amounts, basically any components can be claimed as refund if it is eligible circumstances.

Q 2. What are the eligible circumstances to claim GST refund?

a. Tax Paid on Zero rated supply (tax paid on Export or SEZ supply)

b.Unutilized Input Tax Credit (‘ITC’) if export/sez supply made with payment of tax or Invert duty structure case.

c. Tax Paid on Invoice, where supply not made, and refund voucher has been issued d. Wrong head tax paid (CGST & SGST instead of IGST and vice versa)

e. Excess Cash ledger balance

f. Tax, Interest, or any other amount paid and incidence of such tax, interest not passed to any other person

Most commonly refund cases are of export/ sez supply, Invert Duty Structure and excess cash ledger balance.

Q 3. Any time limit for Refund application?

2 years from the relevant date

Q 4. Any time limit for issuing the Refund Order?

60 days from the date of receipt of application completed in all respects. 

Q 5. Any relaxation due to COVID-19 in timeline to file GST Refund?

Notification 13/2022 dated 5th July 2022, period from the 01-03-2020 to 28-02-2022 has been excluded for the computation of 2 years.

Q 6. Input of Capital goods can be claimed as refund in case of Export supply?

No, an exporter supply without payment of taxes can only claim refund of Input and Input services used in making such supplies, but not on capital goods. However, claim credit of the taxes paid on purchase of capital goods used in the course of furtherance of business.

Q 7. What is LUT?

Any registered person availing the option to supply goods or services for export /SEZs without payment of integrated tax must furnish, prior to export/SEZs supply, a Letter of Undertaking (LUT).

Q 8. M India Pvt Ltd having valid LUT, can they export with payment of taxes?

Yes, even having a valid LUT, exporter can supply with payment of taxes. 

Q 9. A person have submitted Bank Guarantee for issue of Bond, can he later apply LUT?

Yes, he can submit LUT, and get the bond submitted earlier released. 

Q 10. Any restriction goods wise where Invert duty structure refund not allowed?

Yes, In case of supply of nil rated and fully exempted goods, no GST refund allowed for ITC on Input. Further, under the Act, around 45 HSN code mentioned, where no refund of ITC would be allowed, where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on the output supplies of such goods. For example, HSN code: 5007, 1507 to 1518, 2701 to 2703, 8601 to 8608 etc.

Q 11. Any additional condition for casual taxable person or a non-resident taxable person?

Yes. Refund would not be allowed to a non-resident taxable person or casual taxable person unless such person has furnished all returns in respect of entire period for which certificate of registration granted to him had remained in force.

Q 12. Whether supply of services to Nepal would be treated as export?

Yes, being payment of export of services to Nepal is allowed in Indian Rupees by RBI.

Q 13. Whether refund of TDS/ TCS in cash ledger under section 51/52 can be claimed?

Yes, the amount of TDS/TCS under section 51/52 be credited in electronic cash ledger and any amount, which remains unutilized in electronic cash ledger, after discharge of tax dues and other dues, can be refunded to the person.

Q 14. Can refund of compensation cess in case of export against payment of IGST?

ITC of Compensation cess may be availed for export supplies and refund of such unutilized ITC shall be available. However, the calculation of the refundable amount of compensation cess shall be done separately and amount so calculated will be entirely debited from the balance of compensation cess available in the electronic credit ledger. (refer Circular No. 125/ 44/2019 dated 18th November 2019). 

Q 15. Can adjustment of any demand can be adjusted against refund?

Yes, demand can be adjusted against final refund, however not against the provisional refund. 

Q 16. Any minimum limit for refund?

Yes, Rs. 1000/- under each tax head separately and not cumulatively. 

Q 17. A person has got an exemption from all duties of customs on imports under EPCG, advance license etc. whether such exemption would also continue in GST?

Holders of Advance Authorization / EPCG and EOUs need not have to pay IGST, cess etc. on imports. 

Q 18. Which are invoices, where GSTR2A /2B conditions not applicable?

For ISD Invoices, Imports invoices and the inward supplies liable to Reverse Charge (RCM Supplies).   

Q 19. Whether provisional refund is mandatory?

No, there is no prohibition under the law preventing a proper office from sanctioning the entire amount. 

Q 20. Important circulars in relation to the refund? 

a. Circular No. 125/44/2019, dated 18th November 2019

b. Circular No. 139/09/2020, dated 10th June 2020 

c. Circular No. 135/05/2020, dated 31st March 2020 

d. Circular No. 110/29/2019, dated 3rd October 2019 

e. Circular No. 147/03/2021, dated 12th March 2021 

Q 21. Unregistered Buyers claim refund?

As per press release of 48th Meeting of the GST Council dated 17th December 2022, there is no procedure for claim of refund of tax borne by the unregistered buyers in cases where the contract/ agreement for supply of services, like construction of flat/house and long-term insurance policy, is cancelled and the time period of issuance of credit note by the concerned supplier is over. The Council recommended amendment in CGST Rules, 2017, along with issuance of a circular, to prescribe the procedure for filing application of refund by the unregistered buyers in such cases.

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The author can be reached at naveenjain@kjco.net;  Mobile no. is +91-9899882065.

DISCLAIMER: This publication is merely for knowledge purposes only. All the references or content are for educational purposes only and do not constitute legal advice. We do not accept any liabilities whatsoever for any losses caused directly or indirectly by the use/reliance of any information or conclusion contained in this publication.

Author Bio

Naveen, about 37 years, is a Chartered Accountant, Company Secretary and GST certified from VG Learning – with more than 14 years of experience in Assurance, Taxation, Strategy Consultancy, advisory, Process Transformation, Secretarial compliances, setting-up of Operations, Stakeholders’ Relatio View Full Profile

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