GST Refund Claim

Processing of timely GST refunds will help businesses and facilitate trade through the release of blocked working capital funds. Under GST, the GST Council created a standardized system to process GST refund claims in a simple procedure for the taxpayers. The entire GST refund claim and processing are done online on the GST Portal. In this article, we look at when the GST refund can be claimed by taxpayers.

When GST Refund Can Be Claimed?

A GST refund claim can arise on account of:

Export of goods or services.
Supplies to SEZs units and developers.
Deemed exports.
Refund of taxes on purchase made by UN or embassies etc.
Refund arising on account of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court.
Refund of accumulated Input Tax Credit on account of inverted duty structure other than Nil rated or fully exempt supplies.
Finalisation of provisional assessment.
Refund of pre-deposit.
Excess payment due to mistake.
Refunds to International tourists of GST paid on goods in India and carried abroad at the time of their departure from India.
Refund on account of issuance of refund vouchers for taxes paid on advances against which, goods or services have not been supplied.
Refund of CGST & SGST paid by treating the supply as intra-State supply which is subsequently held as inter-State supply and vice versa.

Time Limit for Filing GST Refund Request

Under GST, the applicant should file GST refund claims within 2 years from the relevant date. If the claim is in order, the refund has to be sanctioned within a period of 60 days from the date of receipt of the claim. Interest on the withheld refund shall apply at the rate of 6%. An interest rate of 9% per annum shall apply on the delayed refund (beyond 60 days, arising from the order of authority/ court).

GST Refund Claim on Exports

One of the major categories under which, claim for GST refund arises is export. Exports (whether of goods or services), as well as supplies to SEZs, have been categorised under GST as Zero-Rated Supplies. Because the supply applies at zero per cent, the supplier can claim a refund of input tax credit paid. Currently, exporters can claim a refund on zero-rated supplies under two options. Either the exporter can export under Bond/ LUT and claim a refund of accumulated Input Tax Credit or he may export on payment of integrated tax and claim refund. However, both the methods and delays in processing GST refunds have adversely impacted the working capital cycle of many businesses. Hence, the Government has announced the creation of an e-wallet facility for exporters to quicken and streamline the GST refund process.

Chartered Account Certificate for GST Refund

If a GST refund claim is less than Rs. 2 Lakhs, then a self-declaration of the applicant must be submitted to the effect that the incidence of tax has not been passed to any other person along with other documents listed below. For GST refund claims exceeding Rs. 2 Lakhs, a certificate from a Chartered Accountant/ Cost Accountant must be submitted along with the documents below.

Documents Required for GST Refund

The applicant shall produce the following documents to claim GST refund:

GST Refund for Exports

If the applicant applies a refund claim on account of exports or supply to SEZ, the individual shall submit relevant invoice pertaining to the transaction. Along with the invoice, a statement containing the number and date of shipping bills or bills of export and the number and the date of the relevant export invoices, in a case where the refund is on account of export of goods must also be provided. In case of GST refund on account of export of services, along with the tax invoices, the relevant bank realisation certificates evidencing receipt of payment in foreign currency is also required to be submitted.

GST Refund for Supply to SEZ

If a supplier claims GST refund to an SEZ unit, the applicant shall submit an endorsement from the Proper Officer evidencing receipt of such goods/ services in the SEZ along with the Tax Invoice. Further, the applicant shall produce declaration from the SEZ unit stating that the applicant yet to avail input tax credit of tax from the supplier. If the claim is for:

GST Refund for Accumulated Input Tax Credit

If the applicant applies GST refund claim only for the accumulated input tax credit, only a statement containing invoice details as prescribed in the GST refund rules must be submitted. Its important to note that no refund of the unutilised input tax credit will be allowed on CGST and IGST paid, in case of the supply of services for the construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly. Also, no refund of the unutilised input tax credit will be allowed for CGST and IGST, where the credit has accumulated on account of GST rate of tax on inputs being higher than the rate of tax on output supplies.

GST Refund on Account of Order

In case of a claim of GST refund on account of any order or judgment of appellate authority or court, the reference number of the order giving rise to refund should be given along with the relevant tax invoices.

Procedure for Claiming GST Refund

The refund application has to be submitted electronically in Form RFD 01 within two years from the respective date. The applicant should provide the refund application certified by a Cost Accountant or Chartered Accountant if the amount of refund exceeding Rs 2 lakhs. The GST refund application may then either undergo inspection or an audit, as the case may be. After approval of the refund application, the taxpayer shall receive the GST refund amount claim in the registered bank account. Click here for GST Registration or GST Return Filing