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As a multi-stage, comprehensive, destination-based indirect tax, Goods and Service Tax (GST) has revolutionized the Indian economy, since its implementation on July 1st, 2017. GST is here to streamline the process of collecting and imposing an indirect tax to make the taxation exercise transparent and accountable.  

GST Council, headed by the Finance Minister is formed to regulate the tax rates across the country. There are 4 different tax rates under GST, depending on the type of goods and services – 5%, 12%, 18%, and 28%.

Bringing about a change in the way taxation works in the country is not an easy task. The GST Council had to bring in new taxation concepts, such as Central Goods and Services Tax (CGST), State GST (SGST), and Integrated GST (IGST) to protect the interests of both the centre and state government.

Goods and services sold or resold within a state are liable to pay CGST and SGST. IGST is charged on goods and services that are transacted inter-state.

Payment of Tax Under GST

 

  • What are the types of payment that need to be made?

TDSTDS refers to tax deducted at source. If the payment (salary) that a company or an employer pays to an employee exceeds a certain threshold, the company must deduct tax at source.

TCS – TCS is a type of tax collected by the seller at the time of purchase.  

Reverse ChargeReverse Charge is when the receiver of goods become liable to pay tax.  

Below is a table to show the tax liability under different circumstances.

 

CIRCUMSTANCES CGST SGST IGST
Goods sold from Delhi to Bombay NO NO YES
Goods sold within Bombay YES YES NO
Goods sold from Bombay to Pune YES YES NO

 

 

  • Who should make the payment?
  • A registered dealer
  • Composition dealers
  • Those who need to pay under reverse charge, TDS, and TCS
  1.  What is Electronic Cash ledger, Electronic Credit ledger?

Each registered person under GST must maintain electronic cash ledgers, electronic input tax credit ledger, and tax liability ledger.  

You can record data of tax, interest, penalty, fees paid, and payment done under CGST, SGST, and IGST on your electronic cash ledger. On the electronic input tax credit ledger, you can get details of the input tax credit available under all heads. Tax liability ledger is also to be maintained electronically, for any outstanding liability arising out of the regular return, notices, and penalties.

There are many different ways to utilize credit available under the electronic input credit ledger such as by fulfilling liability arising due to regular return under GST, reversing credit due to a mismatch in invoice or amount of credit, and paying off any liability that arose due to receipt of demand notices.

Refund Under GST

 

  • When can you claim a refund?

 

Under GST, a person should make an application within a period of 2 years from the relevant date using the Form GST-RFD-01 electronically.

 

  • What is the process of claiming a refund?

 

The process of refund under GST is as follows:

  • Taxpayer can claim a refund by filing the application form through the GSTN portal
  • The applicant will then get an acknowledgement number via SMS or email, after the application is filled
  • The next step is where the return and cash ledger is adjusted. This automatically reduces the “carry forward input tax credit”
  • Within the next 30 days of filing of the refund application, refund application and documents submitted will be scrutinized
  • Unjust enrichment would be examined for each refund applicatio. If it does not qualify, the refund will be transferred to CWF (consumer welfare fund)
  • If the claimed refund exceeds the predetermined amount of refund, it will then go through a pre-audit process for sanctioning the refund
  • Refund will then be credited electronically to the account of the applicant via ECS, RTGS, or NEFT
  • Applicant can apply for a refund at the end of each quarter
  • Minimum amount for a refund is Rs 1000. Anything below that amount will not be refunded

A registered person can file the return as per the dates mentioned under GST and claim the balance available in the electronic cash ledger.

GST is set to streamline this process and it would improve the system of calculation, application, and processing of the refund. Under GST, refunds would be calculated for each major head (CGST, SGST and IGST) separately. Claiming of refunds are made easy by just filling an application form on the GST portal, automating the calculation refunds, as all the data will be electronically uploaded.  

GST Law states that, “If any tax ordered to be refunded under section 48 to any applicant is not refunded within sixty days from the date of receipt of application under sub-section (1) of that section, interest at such rate as may be specified in the notification issued by the Central or a State Government on the recommendation of the Council shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application under the said subsection till the date of refund of such tax”. Under GST Model Law, the processing time for a refund application is around 60 days, however, this could be made available in as early as 2 weeks.

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All Articles

  1. Payment voucher has to be issued by the receiver of goods and services at the time of making the payment to the supplier under reverse charge.
  2. refund voucher is to be issued in the case of withdrawal of service or sale of goods by the supplier or service provider under GST.
  3. Clarification on the form used for sanction of refund. A certificate from a chartered accountant or cost accountant required in few cases.
  4. Refund Forms to be submitted in case of rejection or adjustment of refund are clarified in this article. The exporter has to file GST RFD-11.
  5. CBDT has clarified that if GST on services has been indicated separately in the invoice, then no TDS on GST component will be deducted.
  6. The acknowledgment for the refund claimed appears in the form GST RFD-02. This article details the nuances of this acknowledgement section.
  7. Clarification on Statements to be Annexed with the application for refund There are 7 different statements depending on the reason for claiming the refund.
  8. Clarification on the format of Form GST RFD-01 is crucial as it covers the format of application for the refund under GST.
  9. Clarification on the format of Form GST PMT-06 and Form GST PMT-07 is provided in this article, last part of important payment forms under GST.
  10. This article deals with the format of Form GST PMT-05 containing the electronic cash ledger. Details of tax payment through net banking are available here.
  11. Clarification on Format of Form GST PMT-02 is provided in this article. Form GST PMT-02 contains details of input tax credit available and utilized.
  12. Clarification on format of form GST PMT-01 and the particulars regarding the payment of tax, interest etc mentioned under the electronic liability register.
  13. Learn about the different forms for payment of dues under GST that have to be filed electronically through the GST common portal.
  14. Check out the forms GST RFD-01, RFD-02, RFD-03 to be filed for claiming of refund, acknowledgment, and examination under GST.
  15. Find out the important definitions like relevant date, assessment,refund and interest rates for refund under GST. Check out the exceptions also.
  16. Check out the conditions to be fulfilled by the applicant for being granted provisional refund and United Nations refund application forms.
  17. Check out the exemptions and refund claims under GST for Tax and ITC. Find out the situations for payment of refund to applicant.
  18. Check out four basic questions which can explain the basic application of TDS as provided under GST law. Know about TCS compliance for e-commerce sector.
  19. Find the details here about E-ledgers under GST which will help taxpayers know the status of input credit available, tax liability etc.
  20. Check out the payment process under GST which is completely online process and how the Tax liability would be calculated under IGST, CGST, SGST separately.
  21. Know more about the GST Calculator in India with examples. Calculation of the tax charged on goods in the name of CGST, SGST & IGST.
  22. Find out what is Revenue neutral rate(RNR). Know about ratio for distribution of RNR, calculation of RNR and the tax structure.
  23. Find out why every registered taxable person under GST law is required to maintain electronic credit ledger and electronic cash ledger on GST common portal.
  24. This is a step by step guide on how to make GST Payment on the GST Portal. The tax payment can be done only on the GST portal.
  25. TDS needs to be deducted at rate of 1% on value of supply where the supply value under a contract exceeds Rs. 5lakh under GST. The tax is to be deducted by specified persons/entities as notified by the government.
  26. Refund process under GST will be a much faster aand smoother process. It is expected that processing time for refund under GST might be 7 days.