Payment and refund is part and parcel of any tax system. When the actual tax paid is more than the amount of actual tax liability, the refund is demanded. The case of refund may occur though many instances, wiz. Zero rated exports, supplies to SEZ units and developers, etc.
The process of GST refund is standardised under along with set time limits. Recently, the Government has allowed filing the refund application for multiple months in a single window. Before we dwell into the refund process, let’s first know when refund application can be made with GSTN.
The refund application can be made to claim refund of tax, interest, penalty or fee. Among numerous cases of refund application, few of which are mentioned below:
- For excessive payment of tax due to mistake or omission
- Dealer Exports (including deemed export) goods/services under claim of rebate or Refund
- Supplies to SEZ Units or SEZ developers
- Accumulation of Input Tax Credit (ITC) in excess of Output Tax Liability for output or exempt or nil-rated
- Accumulation of unutilised Input Tax Credit (ITC) by reason of higher tax rate on input compared to tax rate output
- Refund of pre-deposits
- Refund arising on account of judgement, decree, order or direction of the Appellant Authority, Appellant Tribunal or any Court.
- Finalization of provisional assessment
Refund Application Process:
The application of refund is made is Form GST RFD-01 electronically on GST portal with required evidentiary documents within prescribed time limit. The taxpayer can also file the refund application for multiple months in single application in form GST RFD-01A. For filing refund claim of multiple tax periods, a restriction provided is that the concerned months shall fall in single financial year.
Time limit: 2 years from relevant date
Normally, the relevant date is date of payment of tax. However, in following scenarios, a different relevant date is prescribed:
|Ground of Refund Application||Relevant Date|
|Goods are exported through Air or Sea||Date on which the Ship or Aircraft leaves India|
Goods are exported by a land vehicle
|Date on which the goods cross the land|
frontier of the country
|Goods are exported through post||Date of dispatch of goods from the Post Office|
|Supply includes services which are completed|
before the receipt of payment
|Payment Receipt Date|
|Services are performed after the receipt of|
|Refund claim made for excess Input Tax|
Credit which is unutilised
|End of the Financial Year for which the refund|
claim is being made
|Goods are supplied for deemed exports i.e.|
supply to SEZ or 100% EOU
|GST return filing date relating to such deemed|
|Refund arises due to an order passed in|
favour of the appellant
Date of such order
|Tax was paid based on provisional|
assessment and now refund arises
Date on which such tax was adjusted
|When the person claiming the refund is not the|
|Date on which the goods are received by such|
Once the time limit is lapsed, the concerned person cannot claim the refund for the relevant data. This results into blockage of credit.
The evidentiary documents to establish the refund claim are filed in Annexure 1 in Form GST RFD-01:
- Where the amount of refund does not exceed INR 2 Lakh: A declaration to the effect that the incidence of tax, interest or any other amount claimed as refund has not been passed on to any other person
- Where the amount of refund exceeds INR 2 Lakh: A Certificate issued by a Chartered Accountant or a cost accountant in Annexure 2 of Form GST RFD-01 to the effect that the incidence of tax, interest or any other amount claimed as refund has not been passed on to any other person
Documents based on ground of refund:
|Ground of Refund Application||Associated Documentary Evidence|
|Refund on account of exports of goods||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
|Refund on account of exports of services||A statement containing the number and date of invoices and the relevant Bank Realisation Certificates or Foreign Inward Remittance Certificates, as the case may be|
|Refund on account of supply of goods to SEZ Unit or SEZ Developer||A statement containing the number and date of invoices along with the evidence regarding the endorsement|
|Refund on account of supply of services to SEZ Unit or SEZ Developer||A statement containing the number and date of invoices, the evidence regarding the endorsement and the details of payment, along with the proof thereof, made by the recipient to the supplier for authorised operations as defined under the Special Economic Zone Act, 2005|
|Refund on account of Deemed Exports||A statement containing the number and date of invoices along with such other evidence as may be notified in this behalf|
|Refund on account of unutilised ITC|
(where tax rate on input is higher compared to tax rate of output)
|A statement containing the number and the date of the invoices received and issued during a tax period|
|Refund arises due to an order passed in|
favour of the appellant
|The reference number and a copy of order passed|
|Refund on account of finalisation of provisional assessment||The reference number of the final assessment order and copy of the order passed|
|Refund on account of excess payment of tax||A statement showing the details of the amount of claim|
The application will be validated by the system before submission. If there is any deficiency at filing level, then form GST RFD-03 is generated to make the deficiencies good. Once the application of refund is filed successfully, an acknowledgement in form GST RFD-02 is generated and sent through mail and SMS.
The application will then be scrutinised by the jurisdictional tax officer. The provision of audit is also inserted for processing refund where the amount of refund exceeds the prescribed amount. On completion of scrutiny and/or audit, the authorised officer will pass the appropriate order for refund application. The final refund order is issued in Form GST RFD-06 where the officer is satisfied that the claim amount is refundable. In case of refund claim arising out of exports, the authorised officer can issue provision refund order of 90% of claim in form GST RFD-04 subject to eligibility of the exporter.
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