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In our previous article, we had covered the form GST RFD-02 (acknowledgement) and the form GST RFD-03 (discrepancy memo). We will cover the form used for provisional sanction of refund by the proper officer (GST RFD-04) and the form used for payment of the final net refund.
Latest Updates on GST Refund
21st December 2021
From 1st January 2022, CBIC made the aadhaar authentication mandatory to apply for a refund under the CGST Rules 89 (Excess tax, interest, penalty, fees paid) and 96 (IGST paid on goods or services exported out of India) in RFD-01.
1st May 2021
Where the time limit to pass orders for rejecting any refund claim fully or partly falls between 15th April 2021 and 30th May 2021, it is extended. The extended time limit shall be later of two dates:
(1) 15 days after reply to the notice OR
(2) 31st May 2021
On application of GST refund, the GST Officer grants Provisional Refund in certain cases. Rules for Provisional Refund are made because the entire refund process takes quite a long time to complete. Meanwhile, exporter or genuine claimant can face working capital shortfalls due to refunds getting delayed. In order to cater to the short-term hardship of the exporter, the refunds are released on a temporary basis to the extent of 90% before a complete scrutiny of application and related records.
Once a complete check is done within the stipulated time limit, the final order for sanction or rejection ( RFD-06 or RFD-08) replaces the provisional refund order (RFD- 04). Consequently, the actual refund amount decided in final order shall be adjusted for the amount already refunded on a provisional basis. Suppose, the GST officer rejects the refund claim, then the claimant has to pay back to the Government the entire amount that he received earlier The Provisional Refund will be granted after Initial Scrutiny of the Application and documents by the Jurisdictional GST Officer.
Provisional refund is applicable in case of Zero-rated Supplies Zero-rated supplies include :
In these cases, The GST officer shall grant the provisional refund to the extent of 90% of the Refund claimed. The Refund claimed will be excluding the amount of ITC that got adjusted if any in the Electronic Credit Ledger on applying for the refund in RFD-01A/01.
Provisional Refund shall be granted by the issue of Form RFD-04 within seven days of giving the Acknowledgement in RFD-02. This Provisional Refund amount is to be credited directly to the Bank account of the Refund applicant. Payment advice in RFD-05 is sent along for this payment.
Exception: The Provisional Refund is not granted if the applicant was prosecuted for the offence under any Indian Laws where the tax evaded is more than Rs. 250 Lakhs anytime in the last five years preceding the tax period for which refund is claimed.
Amount at (iv) can be less than or equal to the amount arrived at in (iii)
Let’s check out how the Form RFD-04 looks like:
The GST officer after scrutiny of the Application and the documentary evidence, after being satisfied about the genuineness of the claims made, shall issue the Payment advice in RFD-05 alongwith the Final Order of Refund Sanction.
The GST officer shall transfer/ credit the Refund amount claimed to the account of Consumer Welfare Fund if there is any doubt regarding Unjust Enrichment i.e If there is suspicion that the claimant has passed the tax incidence to the buyer where the buyer has availed the ITC on same supplies. Any such Refund claims can be made by the aggrieved person by applying to the Fund with the necessary declarations and documents to prove the claim.
Exceptions: In following below cases, this Rule does not apply:
For better understanding, read more related articles