It is imperative to make the process of refund much smoother under GST. A delay in refund would cause problem for the exporters/manufacturer’s in maintaining the working capital and cash flow.
Currently there is delay in months in providing the refund to the exporters/manufacturers. There should be strict regulation in the processing of refund under GST.
(A) Excess payment of tax due to mistake or inadvertence.
(B) Export (including deemed export) of goods / services under claim of rebate or Refund of accumulated input credit of duty / tax when goods / services are exported.
(C) Finalization of provisional assessment.
(D) Refund of Pre – deposit for filing appeal including refund arising in pursuance of an appellate authority’s order (when the appeal is decided in favor of the appellant).
(E) Payment of duty / tax during investigation but no/ less liability arises at the time of finalization of investigation / adjudication.
(F) Refund of tax payment on purchases made by Embassies or UN bodies.
(G) Credit accumulation due to output being tax exempt or nil-rated.
(H) Credit accumulation due to inverted duty structure i.e. due to tax rate differential between output and inputs.
(I) Year-end or volume based incentives provided by the supplier through credit notes.
(J) Tax Refund for International Tourists.
Following are the procedures for processing of refund claimed-:
According to the GST law and recommendations from the Subramanian committee, a refund application is to be processed within a period of 90 days. If the refund application is not processed within said period then a interest at the rate of 6% is recommended.
According to Nirmala Sitharaman( Commerce and industry minister) who spoke for the concern of exporters on delay in refund, that the refunds under GST shall be processed within a period of 7 days. If same is delayed more than 2 weeks, then refund will be provided with interest.
Processing of the refund applications under GST is expected to be a faster and smoother process. Since all the data is going to be uploaded electronically , the verification and scrutinization of refund applications would be faster.