GST Refunds are very crucial in light of the fact that substantial amount of working capital funds is blocked mainly in case of exporters. So this Advisory is issued by us for the ease of the Exporters & others to claim GST Refunds.

Recent Update

GST Council in its 26th Meeting on 10th March sent a strong positive signal to exporting community

  • GST Council reviewed progress in grant of refunds to exports of both IGST and Input Tax Credit. The Council appreciated that the pace of grant of IGST refund has picked up.
  • Thereafter, the GST Council directed GSTN to expeditiously forward the balance refund claims to the Customs/Central GST/State GST authorities, as the case may be, for their immediate sanction and disbursal.

A. Eligibility for Refund

Refund will be sanctioned in following cases:

  • Refund of excess balance in Electronic Cash Ledger.
  • Refund of tax paid on zero rated supply of goods or services of both.
  • Refund of tax on inputs/input services used in making zero rated supply.
  • Refund on account of ITC accumulated due to Inverted Tax Structure.
  • Refund of tax paid on Deemed Exports.
  • Finalization of provisional assessment.
  • On account of appeal/any other adjudication order.
  • Refund for tax paid on purchase made by UN bodies
    and other Notified Agencies.
  • Tax Refund for International Tourists.

B. Procedure for claiming refund

The procedures relating to export have been simplified in GST Regime. The process for the same is as follows:-

TABLE – I – Refund in case of Export on payment of IGST

  • A registered person can clear the goods for export
  • Without payment of IGST under letter of undertaking and claim refund of unutilized ITC.

Or

  • On payment of IGST and claim refund of such tax paid.
  • A registered person, having ITC of GST in balance which cannot be used otherwise, could clear the goods on payment of IGST & claim its refund. If not having ITC of GST in balance, he can clear the goods against letter of undertaking. The decision can be made consignment wise.
  • The shipping bill containing details of invoice shall be deemed to be an application for refund of IGST paid. When the exporter will file his monthly GSTR-1 (Table 6A) return & GSTR-3B, details of relevant tax invoice shall be transmitted electronically by common portal to Customs System. The custom system shall process the refund claim and amount of refund will be electronically credited to bank account of exporter.
  • Exporters can check refund status on “icegate.gov.in” by creating their Login by clicking on link,” https://www.icegate.gov.in/Download/New_Registration_Demo_Updated_APPROVED.pdf ” After login go to column “IGST Validation Details Enquiry”. Correct the error mentioned in this column so that your claims for refund are processed at the earliest
  • For complete process & mismatching issue & solutions, pls refer Circular No. 05/2018-Customs

TABLE–II-Refund of unutilized ITC (Export without payment of IGST & Other cases)

  • Application for refund shall be filed for a tax period in FORM GST RFD-01A online on the common portal.
  • Valid return in FORM GSTR-3B and GSTR-1 has to be filed for the tax period for which refund application has been filed.
  • Registered person applying for refund must give an undertaking to the effect that the amount of refund sanctioned would be paid back to the Government with interest in case it is found subsequently that the requirements have not been complied with in respect of the amount refunded.
  • On filing of refund application, an Acknowledgement Reference Number shall be generated.
  • The FORM GST RFD-01A along with the ARN and other necessary documents prescribed in Rule 89(2) of the CGST Rules, 2017 / Circular No. 17/17/2017-GST dated 15.11.2017 needs to be submitted manually in the office of the jurisdictional Tax officer.

C. Refund of unutilized ITC to exporters

Refund of any unutilized input tax credit of inputs and input services will be allowed except where the goods exported out of India are subjected to

  • Export duty; or
  • Exporter claims drawback of CGST or refund of IGST paid on such export.

D. Number of days required for Refund sanction, Interest payment & mode of transfer

The refundable amount shall be sanctioned within 60 days from the date of receipt of application complete in all respects.

  • However, as a measure of facilitation to exporters, 90% of the amount excluding the amount of input tax credit provisionally accepted will be refunded within seven days from the date of acknowledgement in Form GST RFD-04.
    Provisional refund shall be calculated taking into account the total Input Tax Credit, without making any reduction of credit being provisionally accepted.
  • Time lines have been set for processing of refund claims and claims not settled within 60 days will be paid with interest @6%.
  • Refund amount will be credited directly to the claimant’s bank account. The process is online and hassle free and with minimum interface with tax authorities.

E. Time limit to file refund claim

The refund claim has to be filed within two years from the relevant date.

F. Eligibility of Refund of payment done by mistake

A person may be granted refund of taxes which have been wrongly paid and credited to the electronic cash ledger. A taxable person may pay integrated tax instead of central tax/state tax because of incorrect application of the place of supply provisions. In such case, the taxable person may file an application for refund of excess cash credited in the electronic cash ledger.

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