What is a GST refund?
When taxpayers pay excess GST (Goods and Service Tax) in certain cases and the tax paid is more than the GST liability, the taxpayers can claim their GST refund via a streamlined GST process. The government has created a standardised GST Refund process which is online. There are time-limits set for the process, let us check it in detail.
Scenarios when the taxpayers claim their GST Refund?
- Exports (including deemed exports) under claim of rebate or cumulative balance of ITC
- In case of excess GST paid mistakenly
- Output tax is nil or exempted from tax
- Credit due to provisional assessment
- When you have submitted a deposit against an appeal mail by the respondent, then you shall get that amount refunded after the appeal is resolved or dissolved as part of your GST refunds.
- Refund after an Investigation by an adjudicating officer.
- Refund for foreign embassies or UN bodies
- Output tax is of lesser rate than the input.
- Supplier discounts/credits via issuance of credit notes
- GST paid by international tourist
If the taxpayers need to avail their GST refund timely then they must make an application for the same by filling dedicated forms appropriately. There is a GST refund procedure that needs to be followed and thus the refund shall be credited in their bank accounts respectively.
GST Refund Procedure:
For the taxpayers seeking the GST refund, a set application is to be followed. Let us have a look at the GST refund procedure below:
They need to file form RFD-01 which needs to be certified by an authorized Chartered Accountant within 2 years of the relevant date. The relevant date differs from case to case. It is important for the taxpayers to note the relevant dates as failure to file the application within the given time frame will lead to blockage of credit.
The cases are defined below:
- For goods exported through air or sea: When the aircraft/ship leaves the Indian borders.
- For goods transported through land: When the goods cross the land frontier of the country.
- For goods transported via post: The dispatch date of goods from the post office.
- For services (when the services are completed before the payment): Relevant date is the payment receipt date.
- For services (when payment is made in advance): Relevant date is the invoice date.
- For excess unutilised ITC: Relevant date will be the end of the same financial year.
- For deemed exports/ supply to SEZ/ 100% EOU: Relevant date will be the return filing date.
- When the order is passed in favour of the appellant: Relevant date is the date of that order.
- For following a provisional assessment: The date at which such tax was adjusted.
- Refund for non-suppliers: Relevant date is the date at which the goods are received.
- For every other case, the relevant date will be the date of payment of the tax.
After the application is filled by the taxpayer, the details and the acknowledgement will be auto-generated in Form RFD-02. The same will be forwarded via an email and an SMS for future references to the applicant.
In case of any faults, shortcomings or shortages in the GST refund application then the applicant is required to file Form RFD-03 which will be sent to them for correcting their application.
Documentation for GST Refund:
Along with the online refund application, the applicant also needs to attach certain documents. If the application for the GST refund is below 5 lakhs then declaration needs to be made by the taxpayer stating the amount of refund has not been used by or transferred to any other individual. And, if the application for the GST refund is above 5 lakhs then along with the declaration one also has to provide a document proving that the amount has been paid by the taxpayer.
- If the applicant is a Consulate, United Nations’ body, or a foreign embassy, then in such a situation the application for GST refund should be filed within 90 days (from the end of the quarter) for which the goods or services were obtained. The application is to be filled in the Form RFD-10.
- No refunds will be released if the amount of refund is less than Rs. 1,000/-
- It takes around 30 days to process a refund application
GST Refund Order
When the tax is claimed for exports of goods or services then the authorised officer is subjected to issue a provisional refund order. This order needs to be filed in Form RFD-04 for 90% of the refund claim. This provisional order can only be made in the following cases:
- When the taxpayer has not been defendant for evading taxes for an amount exceeding Rs. 250 lakhs for over a period of 5 years.
- When the taxpayer has a GST compliance rating of more than 5 (out of 10).
- When the taxpayer has no appeal/ review unresolved related to refunds.
When the taxpayer gets a green signal from the authorised officer after all the documents are checked and they abide with law, then the officer passes a final order.
However, the government also maintains a cash ledger that gets updated every time the taxpayer files their return. It is for matching it with the credit else the refund won’t be released. In all other scenarios, the application process will take around 60 days. There are other conditions around these scenarios as well. Form RFD-06 is passed when the refund is adjusted against the taxable amount.
The other forms are: RFD-07 that shows the complete rejection of a refund application; Form RFD-08 is payment advice, RFD-09 is for delayed payments.
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