Reviewed by Sep 30, 2020| Updated on
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.
The following are the different types of refunds under the GST regime:
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 |
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.