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GST Refunds

Reviewed by Anjaneyulu | Updated on Sep 30, 2020

Catalogue

Introduction

The word "refund" means, in basic terms, a sum of money that is returned to an individual when an event occurs. In taxation parlance, refund applies to any amount that is due from tax administration to the taxpayer due to excess payment of taxes or some other cause.

Goods and Services Tax (GST) refund is now an open topic that is a challenge for almost all classes of taxpayers, particularly exporters as it directly impacts their working capital.

Types

The following are the different types of refunds under the GST regime:

  • Refund of excess balance in electronic cash ledger
  • Refund of accumulated ITC on account of exports of goods/services without payment of tax
  • Refund on account of supplies to SEZ unit/developer (without payment of tax)
  • Refund of ITC accumulated due to inverted tax structure
  • Refund to the recipient of deemed export
  • Refund on account of supplies to SEZ unit/developer
  • Refund on account of export of goods
  • Refund on account of export of Services
  • Refund on tax paid on an intra-state supply which is subsequently held to be inter-state supply and vice versa
  • Refund by the supplier of deemed export
  • Refund on account of excess tax payment
  • Refund on account of other reasons
  • Refund on account of assessment/provisional assessment/appeal/any other order
  • Refund to embassies/international organisations

Time Limit

The refund application has to be submitted in RFD 01 Form within two years from the relevant date. The form should also be certified by a Chartered Accountant if it exceeds the prescribed amount. The relevant date is distinct in every case, and here are the relevant dates for some cases:

|Reason for claiming GST Refund | Relevant Date | | ------------ | ------------ | | Excess payment of GST |Date of payment | |Export or deemed exports |Date of despatch/loading/passing the frontier | |ITC accumulates as output is tax-exempt or nil-rated |Last date of the financial year to which the credit belongs | |Finalisation of provisional assessment |Date on which tax is adjusted |

Interest on Refund

Once a refund application is filed, the GST officer may issue an order within 60 days if he is satisfied with the whole or partial refund amount claimed. If the refund is not provided within 60 days of the application by the proper officer, then the refund has to be paid with interest at 6% p.a., calculated for the period of delay.

The interest shall be paid by issuing payment advice in RFD-05. Payment advice (RFD-05) contains the amount of refund delayed, the period of delay, and the amount of interest being paid. The interest amount is directly credited to the registered bank account, which was declared at the time of GST registration.

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