The Goods and Services Tax, which was implemented from July 1, subsumes all the indirect taxes that businesses earlier paid the Center and states separately, with the aim of creating a common market. It involved a complete overhaul of the tax filing system.

Under this regime, companies are given the opportunity to claim refunds for the taxes they pay while buying inputs for their businesses, such as raw materials. However technical glitches, among other things, have meant that the government has repeatedly pushed back the deadline for filing GST returns, delaying tax refunds too. Exporters claim that they are suffering the most.

Timely refund mechanism is essential in tax administration, as it facilitates trade through the release of blocked funds for working capital, expansion and modernization of existing business.


The relevant date as per provisions of Section 54 and 77 of the CGST Act and the requirement of submission of relevant documents as listed in Rule 1(2) of Refund Rules.

A. Claim for refund may arise on account of:

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

7. Finalization 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.

Refund claim is to be filed within 2 years of relevant date.

Credit Notes:

Refund of tax on sales return or decrease in tax liability will be allowed to adjust against future tax liabilities. These credit is not covered under general refund provisions of section 54 of the CGST Act 2017.

Treatment for Zero Rated Supplies:

As per section 16 of the IGST Act 2017, following two are covered under zero rated supplies and eligible for refund as per section 54 of CGST Act 2017.

a) export of goods or services or both; or

b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.

Refund of input tax credit even though non taxable and exempt supplies.

Every person making claim of refund on account of zero rated supplies has two options. Either he 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.

90% Provisional refund within 7 days of submission of acknowledgement of refund application.

Acknowledgement of refund generally issued within 14 days but in case of IGST paid on zero rated supply acknowledgement would be issued within 3 days.

No provisional refund who was, during any period of five years immediately preceding the refund period, was prosecuted.

Payment of Wrong Tax under GST:

Paid IGST instead of CGST and SGST or vice versa. No worries. Interest won’t be chargeable on correct tax payment and refund of wrongly paid tax will be allowed without subjecting it to the provision of unjust enrichment.

Claim by a Person who has Borne the Incidence of Tax:

More tax collected than due must be paid. Refund will be granted who has borne the incident of tax.

Refunds to Casual/Non-Resident Taxable Persons:

Casual/Non-resident taxable person has to pay tax in advance at the time of registration. Refund, if any due during the period of effective registration, will be granted subject to such person has filed all return due during the period of registration.

Refund to UN Bodies and Other Notified Agencies:

As per section 55 of the CGST Act, such taxable persons can claim refund on taxes paid on purchases made during the period.

The claim has to be made before the expiry of six months from the last day of the quarter in which such supply was received.

Refund to International Tourist:

International tourist procuring goods in India, may while leaving the country seek refund of integrated tax paid by them. The term, “tourist” has been defined and refers to any person who is not normally a resident of India and who enters India for a stay of not more than 6 months for legitimate non-immigrant purposes.

Unjust Enrichment:

Talking about unjust enrichment, a presumption is always drawn that the businessman will shift the incidence of tax to the final consumer. This is because GST is an indirect tax whose incidence is to be borne by the consumer. It is for this reason that every claim of refund (barring specified exceptions) needs to pass the test of unjust enrichment. And every such claim if sanctioned is first transferred to the Consumer Welfare Fund.

No unjust enrichment in following cases:

a. refund of accumulated ITC,

b. refund on account of exports,

c. refund of payment of wrong tax (integrated tax instead of central tax plus state tax and vice versa),

d. refund of tax paid on a supply, which is not provided or when refund voucher is issued or if the applicant shows that he has not passed on the incidence of tax to any other person.

In all other cases, the test of unjust enrichment needs to be satisfied for the claim to be paid to the applicant.

Refund less than 2 lakh:

A self-declaration of the applicant to the effect that the incidence of tax has not been passed to any other person will suffice to process the refund claim.

Refund claims exceeding Rs. 2 Lakhs:

A certificate from a Chartered Accountant/ Cost Accountant will have to be given.

Standardized procedure to claim refund under GST:

1. Online application in a standardized form.

2. Acknowledgement will be issued within 14 days.

3. The claim for refund of amount lying in the credit balance of the cash ledger can be made in the monthly returns also.

4. The Proper Officer has to convey deficiencies if any in the refund claim within 14 days and in such cases the claim will be sent back to the applicant along with the notified deficiencies, and the applicant can file the refund claim again after making goods the deficiencies.

5. No deficiency memos can be raised after the mandatory 14 day period. The claim, if in order, has to be sanctioned within a period of 60 days from the date of receipt of the claim.

6. Interest at the rate of 6% or 9% on payment of refund after 60 days as per section 56 of the CGST Act 2017.


1. A statement of relevant invoices (NOT THE INVOICES ITSELF) pertaining to the claim.

2. In case refund is on account of export of services, apart from the statement of invoices, the relevant bank realization and certificates evidencing receipt of payment in foreign currency is also required to be submitted.

3. If it is a claim made by the supplier to the SEZ unit, an endorsement from the Proper Officer evidencing receipt of such goods/services in SEZ also needs to be submitted. Further Declaration is also required from the SEZ unit to the effect that they have not availed ITC of the tax paid by the supplier.

4. If the claim is for refund of accumulated ITC, only a statement containing invoice details as prescribed in the Refund rules need to be given.

5. In case of claim of refund on account of any order or judgment of appellate authority or court, the reference number of the order giving rise to refund should also be given.

6. For crossing the bar of unjust enrichment, if the refund claim is less than Rs.2 Lakhs, then a self-declaration by the applicant to the effect that the incidence of tax has not been passed to any other person will suffice to process the refund claim. For refund claims exceeding Rs. 2 Lakhs, a certificate from a Chartered Accountant/Cost Accountant will have to be given.

Rejection of refund application:

In case the claim is sought to be rejected by the Proper Officer, a notice has to be given online to the applicant stating the ground on which the refund is sought to be rejected. The applicant needs to respond online within 15 days from the receipt of such notice. Thus no claim can be rejected without putting the applicant to notice.

Payment to be Credited Online:

The refund claim, wherever due, will be directly credited to the bank account of the applicant.

Brief about author : Author Pratik R Kariya  is Founder and Managing Partner at Shubh Business Consulting LLP having 10+ years experience with a demonstrated history of working in the Accounting and Auditing industry. Skilled in Outsourcing Management, SOP Development, Audit and Assurance, financial reporting and analysis, Indirect tax consultancy. Strong entrepreneurship professional with a C.A. Inter, B. Com, A. C. S. Focused in account and tax outsourcing.

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December 2020