Refund refers to an amount that is due to the tax payer from the tax administration. According to section 54 of the CGST Act, 2017, any person claiming GST refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date.
If there is any balance in the electronic cash ledger he may claim such GST refund in the return furnished under section 39.
If there is any balance in the electronic credit ledger he can claim such GST refund by an application within 2 years.
UNO agencies, Embassies etc. entitled to a refund of tax paid by it on inward supplies of goods or services or both, may make an application for such refund, in such form and manner as may be prescribed, before the expiry of six months from the last day of the quarter in which such supply was received.
GST Refund of unutilized input tax credit
Unutilized input tax credit can be allowed as refund in accordance with the provisions of sub-section (3) of section 54 in the following situations
i) Zero rated supplies made without payment of tax
ii) Where credit has accumulated on account of rate of tax on inputs being higher than the rate of taxes on output supplies other than nil rated or fully exempt supplies.
No refund of unutilized input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty, and also in the case where the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid on such supplies.
Documentary Evidence required for GST Refund
The refund application has to be supported by prescribed documents evidencing facts that the refund is due to the applicant. The applicant must submit documentary evidences including invoice or similar document which are issued by him to indicate that the tax payable on the supplies, to establish the fact that incidence of tax/interest/amount paid was not passed on by the claimant to any other person.
Self-Declaration if GST refund is less than 2 lakhs
If the amount of refund claim is less than Rs.2 lakhs, there is no need of filing such documentary evidence. Instead, a self-declaration based on the documentary and other evidences by the claimant, certifying that he has not passed on the incidence of such tax and interest is sufficient to claim refund.
The refund relating to an application if found in order, will be sanctioned within 60 days from the date of receipt of complete application containing all the prescribed information and the amount so determined shall be credited to the consumer welfare fund.
Consumer Welfare Fund
There shall be established by the Central or a state Government a fund, to be called the Consumer Welfare Fund.
There shall be credited to the Fund, in such manner as may be prescribed,-
(a) The amount of tax and
(b) Any income from investment of the amount credited to the fund and
(c) any other monies received by the Central or a state government for the purposes of this fund.
Utilization of Fund
All sums credited to the fund shall be utilized by the Government for the welfare of the consumers in such manner as may be prescribed. The Government or the authority specified by it shall maintain proper and separate account and other relevant records in relation to the Fund and prepare an annual statement of accounts in such form as may be prescribed in consultation with the Comptroller and Auditor General of India.
Interest on delayed GST refunds
Section 56 of the CGST Act, 2017 states that if any tax ordered to be refunded under section 54 is not refunded within sixty days from the date of receipt of application interest at such rate not exceeding six percent.
Where any claim of refund arises from an order passed by an adjudicating authority or appellate tribunal or court which has attained finality and the same is not refunded within sixty days from the date of receipt of application filed consequent to such order, interest at such rate not exceeding nine percent.
Situation 1 General cases- Maximum rate of interest 6%
Situation 2 Refund after order of appellate authority-Maximum rate of interest 9%