The article is written as a part of a series of articles on the comparison of reporting between the present/old GST returns system with the new GST returns system.
In our previous comparison article on exports, we have covered the reporting of refund claims on exports with and without payment of tax. In this article, let us see how to claim and report various other types of refunds under GST.
Reporting of GST refunds under the present/old system
Refunds under GST can be claimed in RFD-01/RFD-01A in all the cases except a few. In case of export of goods, the Table 6A of the GSTR-1 itself acts as an application for refund of the taxes paid. The rest of the cases require GSTR-3B filing along with the refund application in RFD-01. For the period from 1 July 2017 to 25 September 2019, the RFD-01A form was filed online and later manually submitted at the GST facilitation centres for processing purposes. At present, the GST portal allows complete online processing of refund applications in RFD-01.
The following list of refund types will need RFD-01 form under present return system:
- Excess balance in electronic cash ledger/excess tax payment
- Export of services with tax payment
- Accumulated ITC on inputs used for export of goods/services without payment of tax
- GST assessment order
- Accumulated ITC due to inverted duty structure
- Supplies made to SEZ unit/developer either with or without payment of tax
- Refund towards deemed exports either by supplier or recipient
- Tax paid as intrastate supply which is later held as interstate supply
- Advances paid towards supplies not yet made or invoices not issued
Apart from the RFD-1 application for taxpayers, they must also declare the summary details of GST refunds in their annual return in form GSTR-9 and reconciliation statement in form GSTR-9C.
GST refunds mechanism under the new system
The new GST returns system has one main return supported by two annexures. Since the refund application is independent of the GST returns, except in a few types of refunds, there have not been many changes.
In ANX-1, there is an option introduced for taxpayers who are reporting ‘supplies to SEZ units/developers’ and ‘deemed exports’ called ‘Would You Claim Refund?’. Here, as a supplier, taxpayers must choose whether they want to claim the GST refunds or not. If they choose not to, their recipients (such as the SEZ unit/developer) will be able to claim a refund of tax paid on such supplies.
Apart from this, there is an option to amend annexure and return in ANX-1A and RET-1A. These returns have introduced a new validation. The amendment return in ANX-1A will not allow reporting of such invoices or documents on which refund is already processed.
The refund claim process for the rest of the refund types, except the export of goods, remains the same as running under the present system of return filing.
The RET-1 has introduced a new table 8: Refund claimed for electronic cash ledger. It requires reporting of tax, interest, penalty, fees as classified for each of the tax head. It allows taxpayers to report the claims of GST refund due to excess cash balance in ledger either on account of excess tax payments or refund due to the assessment orders. The format of the table is as given below:
Implications due to the changes
The changes made with regards to supplies to SEZ units and deemed exports will help plug the gaps in the processing of refunds. It allows the tax authorities to keep track of refund processing on every transaction and avoids duplications.
For further understanding of how new GST returns will change the reporting of various particulars, read: