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In our previous article, we had discussed the refund process of input tax credit(ITC) and tax under GST. GST bill was passed in Rajya sabha on 4 April 2017 and quite a few changes were made from the revised GST model law released in November. We will discuss following topics on refund in this article:

  • Time limit for filing refund claim
  • Refund of ITC cases & exceptions
  • Situations for payment of refund to applicant

Refund Claims under GST for Tax and ITC

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Refund Claims under GST for Tax and ITC

Time limit for filing refund claim

Any person claiming the refund of the GST tax, or the interest paid should make an application within a period of two years from the relevant date using the Form GST RFD-01 electronically. A registered person may claim the balance available in the electronic cash ledger by filing the return as per the dates mentioned under GST.

An agency of the United Nations Organization or any multilateral financial institution and organizations notified under the United Nations, Consulate or Foreign embassies are all entitled to refund of tax on inward supply of goods and services or both. An application has to be filed for the refund before the expiry of 6 months from last day of the quarter in which such goods/service were received.

Refund of ITC Cases and Exceptions 

Refund of unutilized input tax credit can be claimed in the following two cases under GST:

  1. Unutilized input tax credit on zero-rated goods/services on which no payment of tax was made can be claimed as refund.
  2. Accumulation of unutilized ITC due to higher tax rate on inputs than the output supplies (other than zero-rated/exempted goods)

Note: No refund of unutilized ITC would be allowed under the following cases:

  1.  If the unutilized ITC is for GST paid on goods exported out of India which attract excise duty.
  2. If the supplier of goods has availed duty drawback on the excise duty paid or claims the refund on the integrated tax paid on such supply.

The application process for claiming refund shall include:

(a) such documentary evidence as may be prescribed to establish that a refund is due to the applicant and

(b) such documentary or other evidence, like the amount mentioned in tax invoice, as the applicant may furnish to establish the amount of tax and interest, if any, paid by the applicant and that he has not passed the tax burden to another person.

If the amount of refund claimed is less than Rs 2 lakhs then the taxpayer can file an application based on documentary or other evidence but only by certifying that the incidence of such tax is not passed on to any other person.

Situations for payment of refund to applicant

If the refund amount claimed by the applicant is relatable to:

(a) refund of tax paid on zero-rated supplies of goods or services or both or on inputs or input services used in making such zero-rated supplies

(b) refund of unutilized ITC in the case of the tax rate on the input being higher than the tax rate on the output

(c) refund of tax paid on the supply of goods/services which were provided wholly or partially and invoice was not issued

(d) refund of tax paid in excess due to confusion in the transaction being an interstate or intrastate

(e) the tax and interest, if any, or any other amount paid by the applicant, if he had not passed on the incidence of such tax and interest to any other person


(f) the tax or interest borne by such other class of applicants as the Government may, on the recommendations of the Council, by notification, specify

The refund of tax and ITC under GST would be a simpler process as compared to the current scenario. We will discuss the delay in the refund, interest rate, and certain key definitions in next article.


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