TAX REFUND UNDER GST

Meaning and Eligibility:

A tax refund refers to any amount that is due or refundable to the tax payer by the tax department.

The refund under GST can be claimed under the following:

  • Excess payment of taxes,
  • Unutilized input tax credit on account of output supplies being exports,
  • Finalization of provisional assessment,
  • Refund of pre-deposit where the demand is dropped wholly or partly,
  • Credit accumulation due to output tax being NIL or concessional.
  • Carry forward refund of Input Tax Credit etc.

Process for claiming GST Refund:

Every claim for refund, has to be filed in form GST RFD – 1 before the expiry of 2 years from the relevant date, which will be acknowledged (if complete in all aspects) in 14 days.

The Proper Officer has to convey deficiencies if any in the refund claim within 14 days and in such cases the claim will be sent back to the applicant along with the notified deficiencies, and the applicant can file the refund claim again after making goods the deficiencies

Interest:

The claim, if in order, has to be sanctioned within a period of 60 days from the date of receipt of the claim. If this mandatory period is exceeded, interest will become payable along with refund from the expiry of 60 days till the date of payment of refund (rate of interest has been recommended as 6% or 9% as may be prescribed).

Documents:

For every claim, the documents required are:-

  • A statement of relevant invoices pertaining to the claim.
  • In case refund is on account of export of services, apart from the statement of invoices, the relevant bank realization certificates evidencing receipt of payment in foreign currency is also required to be submitted.
  • In case of claim of refund on account of any order or judgment of appellate authority or court, the reference number of the order giving rise to refund should also be given, etc.
  • In case the claim is sought to be rejected by the Proper Officer, a notice has to be given online to the applicant stating the ground on which the refund is sought to be rejected. The applicant needs to respond online within 15 days from the receipt of such notice.

 Various Refund Forms:

  • Form GST RFD 01

Application for refund of tax, interest, penalty, fees or any other amount

  • Form GST RFD 02

Acknowledgement to the applicant, indicating date of filing of refund.

  • Form GST RFD 03

Where any deficiencies are noticed, the proper officer shall communicate the deficiencies to the applicant in FORM GST RFD-03, requiring him to file a fresh refund application after rectification of such deficiencies.

  • Form GST RFD 04

After scrutiny of the claim and the evidence submitted in support thereof, the proper officer shall make an order in FORM GST RFD-04, sanctioning the amount of refund due to the said applicant on a provisional basis within a period not exceeding seven days of receipt of acknowledgement.

  • Form GST RFD 05

The proper officer shall issue a payment advice in FORM GST RFD-05 for the amount sanctioned under provisional basis and the same shall be electronically credited to any of the bank accounts of the applicant.

  • Form GST RFD 06

Where, upon examination of the application, the proper officer is satisfied that a refund is payable to the applicant, he shall make an order in FORM GST RFD-06, sanctioning the amount of refund to the applicant, mentioning therein the amount, if any, refunded to him on a provisional basis, amount adjusted against any outstanding demand under the Act or under any existing law and the balance amount refundable.

  • Form GST RFD 07

In cases where the amount of refund is completely adjusted against any outstanding demand under the Act or under any existing law, an order giving details of the adjustment shall be issued in Part A of FORM GST RFD-07.

Where the proper officer or the Commissioner is of the opinion that the amount of refund is liable to be withheld, he shall pass an order in Part B of FORM GST RFD-07 informing him the reasons for withholding of such refund.

  • Form GST RFD 08 and GST RFD 09

Where the proper officer is satisfied, that the whole or any part of the amount claimed as refund is not admissible or is not payable to the applicant, he shall issue a notice in FORM GST RFD-08 to the applicant, requiring him to furnish a reply in FORM GST RFD-09 within fifteen days of the receipt of such notice.

 Refund to the Exporter?

GST law allows the flexibility to the exporter (which, will include the supplier making supplies to SEZ) to claim refund upfront as integrated tax (by making supplies on payment of tax using ITC) or export without payment of tax by executing a Bond/LUT and claim refund of related ITC of taxes paid on inputs and input services used in making zero rated supplies.

Grant of refund on provisional basis:

In case of zero rated supplies, GST law also provides for grant of provisional refund of 90% of the total refund claim within 7 days after giving the acknowledgement (usually within 14 days but in case of zero rated supplies, the acknowledgement would be issued within a period of 3 days). Further, the provisional refund would not be granted to such supplier who was, during any period of five years immediately preceding the refund period, was prosecuted.