FAQs on Refund under GST

What is the procedure for applying refund of GST interest?

Refund of any tax, interest if any paid on such tax; unutilised input tax credit has to be applied online in FORM GST RFD 1 in the common portal of GST.

What is the time limit to claim GST refund claim? Explain the time limit for refund of GST paid in India?

The time limit for refund of GST: before expiry of 2 years from the relevant date.

Meaning of relevant date.

Under which situations we can claim refund under GST?

1. Export of goods or services
2. Supplies to SEZs units and developers
3. Deemed exports
4. Refund of taxes on purchase made by UN or embassies etc.
5. Refund arising on account of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court
6. Refund of accumulated Input Tax Credit on account of inverted duty structure
7. Finalization of provisional assessment
8. Refund of pre-deposit
9. Excess payment due to mistake
10. Refunds to International tourists of GST paid on goods in India and carried abroad at the time of their departure from India
11. Refund on account of issuance of refund vouchers for taxes paid on advances against which, goods or services have not been supplied
12. Refund of CGST & SGST paid by treating the supply as intrastate supply which is subsequently held as inter-State supply and vice versa

When can a registered tax payer under composition scheme claim refund?

A registered person may claim refund of any unutilized input tax credit at the end of any tax period.

Circumstances when refund of unutilized input tax credit can be allowed?

(i) zero rated supplies made without payment of tax;

(ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council

Provided further that no refund of unutilised input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty.

Provided also that no refund of input tax credit shall be allowed, if the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid on such supplies.

What are the supporting documents that have to be accompanied along with the application for refund?

The application shall be accompanied by -

(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 (including the tax invoice and any other documents liable for assessment) as the applicant may furnish to establish that the amount of tax and interest, if any, paid on such tax or any other amount paid in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such tax and interest had not been passed on to any other person.

Circumstance when no documentary evidence is required for claiming refund?

If the amount claimed as refund is less than 2lakhs then no documentary evidence is required. In such case a declaration is required certifying that the incidence of such tax and interest had not been passed on to any other person.

When is refund being granted on provisional basis?

Where the refund relates to zero-rated goods or services or both, the 90% of the amount so claimed may be granted on provisional basis.

What is the time-limit for the final order for refund to be passed?

The final order for refund is to be passed within sixty days from the date of receipt of application complete in all respects.

Is interest on claimed amount of GST amount paid, if refund is delayed after 60 days afer passing of the final order for refund?

Yes, interest @6% will be paid after the expiry of 60 days from the date of passing of the final order for refund.

How is the amount of refund being paid to the applicant?

The amount of refund will be paid by:

Crediting it to the Beneficiary's Account as per the details provided by the applicant.

When will the amount of refund be credited to the beneficiary's account?

If the refund relates 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 input tax credit

(c) refund of tax paid on a supply which is not provided, either wholly or partially, and for which invoice has not been issued, or where a refund voucher has been issued;

(d) refund of tax in pursuance of section 77 Tax wrongfully collected and paid to the Central Government or State Government

(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; or

(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.

In any other circumstances exist other than those mentioned above, the amount will be credited to the Consumer Welfare Fund.

What is the liability of the casual taxable person or a non-resident taxable person for refund under GST?

The amount of advance tax deposited by a casual taxable person or a non-resident taxable person  shall not be refunded unless such person has, in respect of the entire period for which the certificate of registration granted to him had remained in force, furnished all the returns.

What is the threshold limit for claiming Refund?

No, refund will be granted if the amount of claim is less than Rs.1,000/-.

How to claim refund under different scenarios?

• Refund of any tax, interest, penalty, fees or any other amount paid by him- File an application electronically in FORM GST RFD-01 through common portal.
• Any refund relating to electronic cash ledger- Refund can be claimed through the return furnished in FORM GSTR-3 or FORM GSTR-4 or FORM GSTR-7 as the case may be.

 Who shall file application for refund in case of deemed exports?

The application may be filed by:

• The recipient of deemed export supplies, or
• The supplier of deemed exports in case where the recipient does not avail ITC on such supplies.

What are the documentary evidences required to be furnished with FORM GSTR RFD-01?

a. the reference number of the order and a copy of the order passed by the proper officer or an appellate authority or Appellate Tribunal or court resulting in such refund or reference number of the payment of the amount specified in subsection (6) of section 107 and sub-section (8) of section 112 claimed as refund;

b. a statement containing the number and date of shipping bills or bills of export and the number and the date of the relevant export invoices, in a case where the refund is on account of export of goods;

c. a statement containing the number and date of invoices and the relevant Bank Realization Certificates or Foreign Inward Remittance Certificates, as the case may be, in a case where the refund is on account of the export of services;

d. a statement containing the number and date of invoices as provided in rule 46 along with the evidence regarding the endorsement specified in the second proviso to sub-rule (1) in the case of the supply of goods made to a Special Economic Zone unit or a Special Economic Zone developer;

e. a statement containing the number and date of invoices, the evidence regarding the endorsement specified in the second proviso to sub-rule (1) and the details of payment, along with the proof thereof, made by the recipient to the supplier for authorized operations as defined under the Special Economic Zone Act, 2005, in a case where the refund is on account of supply of services made to a Special Economic Zone unit or a Special Economic Zone developer;

f. a declaration to the effect that the Special Economic Zone unit or the Special Economic Zone developer has not availed the input tax credit of the tax paid by the supplier of goods or services or both, in a case where the refund is on account of supply of goods or services made to a Special Economic Zone unit or a Special Economic Zone developer;

g. a statement containing the number and date of invoices along with such other evidence as may be notified in this behalf, in a case where the refund is on account of deemed exports;

h. a statement containing the number and the date of the invoices received and issued during a tax period in a case where the claim pertains to refund of any unutilized input tax credit under sub-section (3) of section 54 where the credit has accumulated on account of the rate of tax on the inputs being higher than the rate of tax on output supplies, other than nil-rated or fully exempt supplies;

i. the reference number of the final assessment order and a copy of the said order in a case where the refund arises on account of the finalization of provisional assessment;

j. a statement showing the details of transactions considered as intra-State supply but which is subsequently   held to be inter-State supply;

k. a statement showing the details of the amount of claim on account of excess payment of tax;

l. a declaration to the effect that the incidence of tax, interest or any other amount claimed as refund has not been passed on to any other person, in a case where the amount of refund claimed does not exceed two lakh rupees.

How is Refund amount calculated in case of Zero-rated supply of goods or services without payment of tax under bond or LUT?

Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) x Net ITC ÷Adjusted Total Turnover

Where, -

(A) "Refund amount" means the maximum refund that is admissible;

(B) "Net ITC" means input tax credit availed on inputs and input services during the relevant period other than the input tax credit availed for which refund is claimed under sub-rules (4A) or (4B) or both;

(C) "Turnover of zero-rated supply of goods" means the value of zero-rated supply of goods made during the relevant period without payment of tax under bond or letter of undertaking, other than the turnover of supplies in respect of which refund is claimed under sub-rules (4A) or (4B) or both;

(D) "Turnover of zero-rated supply of services" means the value of zero-rated supply of services made without payment of tax under bond or letter of undertaking, calculated in the following manner, namely:-

Zero-rated supply of services is the aggregate of the payments received during the relevant period for zero-rated supply of services and zero-rated supply of services where supply has been completed for which payment had been received in advance in any period prior to the relevant period reduced by advances received for zero-rated

supply of services for which the supply of services has not been completed during the relevant period;

(E) "Adjusted Total turnover" means the turnover in a State or a Union territory, as defined under clause (112) of section 2, excluding -

• the value of exempt supplies other than zero-rated supplies and
•  the turnover of supplies in respect of which refund is claimed under sub rules (4A) or (4B) or both, if any, during the relevant period;

(F) 'Relevant period” means the period for which the claim has been filed.

 How is the Refund Amount calculated for refund on account of inverted duty structure?

Maximum Refund Amount = {(Turnover of inverted rated supply of goods) x Net ITC ÷ Adjusted Total Turnover} - tax payable on such inverted rated supply of goods

Explanation.- For the purposes of this sub rule, the expressions 'Net ITC” and 'Adjusted Total turnover” shall have the same meanings as assigned to them above.

 What are the conditions to be fulfilled for grant of Provisional Refund?

• Should not have been prosecuted of any offence during any period of five years immediately preceding the tax period to which claim relates to., or
• Where the tax evasion does not exceeds Rs.2,50,000/-

What is the time limit for grant of Provisional Refund?

Within a period of seven days from the date of acknowledgement. The proper officer shall issue a payment advice in FORM GST RFD-05 for the amount sanctioned and the same shall be electronically credited to any of the bank accounts of the applicant mentioned in his registration particulars and as specified in the application for refund.

What is unjust enrichment? What are the formalities regarding unjust enrichment?

Unjust enrichment is a legal concept that refers to certain situations where one person benefits unlawfully at the expense of another.

The following are some of the rules applying to unjust enrichment:

• Unjust enrichment is not applicable to real-time exports of goods and services, since the recipient is located outside the taxable territory.
• Unjust enrichment is applicable in the case of Deemed Exports.
• Unjust enrichment is applicable to refunds except in cases of exported goods and unutilized ITC.
• Should a taxable person want to claim that unjust enrichment is not applicable to them, the concerned person should provide a relevant application for the claimed refund, along with proof that the tax or interest was paid.
• Only self-declaration is required when the claimed refund is less than Rs 2 lakhs.

 Will the principle of unjust enrichment apply to exports?

The principle of unjust enrichment is not applicable in case of exports of goods or services as the recipient is located outside the taxable territory.

 How is the application for refund of integrated tax paid on goods exported out of India filed?

The Shipping bill filed by the exporter of goods shall be deemed to be the application for refund of integrated tax paid on goods exported out of India.

 Who is required to file  the export manifest or export report?

The person in charge of the conveyance carrying the export goods should file the export manifest or an export report carrying the number and date of shipping bills or bills of export.

 What is the time period for filling of refund of integrated tax paid on export of goods or services under bond or LUT without payment of tax?

Any registered person availing the option to supply goods or services for export without payment of integrated tax shall furnish, prior to export, a bond or LUT in FORM RFD-11 within a period of

• Fifteen days after the expiry of 3 months from the date of issue of the invoice for export
• Fifteen days after the expiry of one year from the date of issue of the invoice for export, if the payment for such services is not received by the exporter in convertible foreign exchange.

Suppose a taxable person has paid IGST/ CGST/SGST mistakenly as an Interstate/intrastate supply, but the nature of which is subsequently clarified. Can the CGST/SGST be adjusted against wrongly paid IGST or vice versa?

The taxable person cannot adjust CGST/SGST or IGST with the wrongly paid IGST or CGST/SGST but he is entitled to refund of the tax so paid wrongly - Sec.77 of the CGST/SGST Act.

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Compiled by: CA M.L Rajoria and CS Riti Goyal