Refund under GST

Introductions

Tax refund includes refund of tax on goods and/or services exported out of India or on input or input services used in the goods and /or services which are exported outside India, or refund of tax on the supply of goods regarded as deemed exports, or refund of unutilized input input tax credit as provided under section 38(2).

Situations under which refund may arise :>-

1. Excess payment of tax due to mistake or inadvertence.
2. Export (including deemed export of goods/services under claim of rebate or Refund of accumulated input credit of duty/ tax when goods/ services are exported.
3. Finalization of provisional assessment.
4. Refund of Pre - deposit for filing appeal including refund arising in pursuance of an appellate authority's order (when the appeal is decided in favor of the appellant)
5. Payment of duty / tax during investigation but no/ less liability arises at the time of finalization of investigation / adjudication.
6. Refund of tax payment on purchases made by Embassies or UN bodies.
7. Credit accumulation due to output being tax exempt or nil-rated.
8. Credit accumulation due to invertd duty structure i.e. due to tax rate differential between output and inputs.
9. Year-end or volume based incentives provided by the supplier through credit notes.
10. Tax Refund for international Tourists.

Refund Process under GST

Following are the procedures for processing of refund claimed:>-

• Application form for claiming refund can be filed through the GSTN(Goods and Services Network) Portal.
• An acknowledgement number would be shared with applicant via sms or email, once the application is filed electronically.
• Adjustment would be made to return and cash ledger and reduce the "carry-forward input tax credit" automatically.
• Refund application and documents submitted shall be scrutinized within a period of 30 days of filing the refund application.
• Concept of "unjust enrichment" would be examined for reach refund application. If it does not qualify, then the refund would be transferred to CWF (Consumer Welfare Fund).
• If refund claimed exceeds the predetermined amount of refund then it will go through pre-audit process for sanctioning the refund.
• Refund will be credited electronically to the account of applicant via ECS, RTGS, NEFT.
• Application for refund can be made at end of each quarter.
• No refund shall be provided for an amount of less than Rs. 1000.

Documents required for claiming refund:>-

For claiming refund there are several documents which are required so that refund application should be minimul but adequate. Below given the list of documents required :--

1. All payment of taxes are done electronically and all the B2B invoices are uploaded on the portal hence there are following documents which are not called during refund :---
• Copy of proof of payment of tax i.e. challan copy etc.
• Copy of invoice
• Documents evidencing export as it will be verified vide ICEGATE.
2. A certificate from a chartered accountant may be called for evidencing that the tax burben has not been passed on to buyer under the principle of "Unjust enrichment".
3. Any other documents as prescribed by the refund sanctioning authority.

Delay in Refund and interest

According to the GST law and recommendations from the Subramanian committee, a refund application is to be processed within a period of 90 days. If the refund application is not processed within said period then a interest at the rate of 6% is recommended.

According to Nirmala Sitharaman (Commerce and industry minister) who spoke for the concern of exporters on delay in refund, that the refunds under GST shall be processed within a period of 7 days. If same is delayed more than 2 weeks, then refund will be provided with interest.

Procedure for claiming refund:>--

It is recommended that state government will deal with SCGT refund applications and central government will deal with CGST and IGST refund applications.

General points on procedure of claiming refund:-

• In some case if refund is not found legal or correct than a SCN may be issued to the applicant.
• In case refund application is found in order but not satisfy the principle of unjust enrichment than amount will transfer to consumer welfare fund.
• It is also recommended that there should no refund in case the amount is less than Rs. 1000.
• Relevant authorities may adjust the refund amount against demand amount due from assesses.

Time Limit for granting refund & interest in case of delay:-

As per the GST Law the time limit for granting refund will be 90 days from date of system generated acknowledgement of refund.

In case refund is not granted in prescribed time limited than a interest @ 6% p.a is recommended and the period for interest will be started from the last day on which refund should be granted.

Hope you will find it useful.