Sandeep Ahuja & Co.

Established in the year 1986, we are a leading chartered accountancy firm based in Delhi & NCR rendering comprehensive professional services which include statutory audit, internal audit, direct tax, transfer pricing, GST, bank audit, propriety audit, cost accounting, internal financial controls and risk advisory.

Friday, July 14, 2017

Refunds under GST

Refund under GST can be claimed in the following situations:

i. Credit accumulation due to output being tax exempt or nil-rated.

ii. 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).

iii. Credit accumulation due to inverted duty structure i.e. due to tax rate differential between output and inputs.

iv. Excess payment of tax due to mistake or inadvertence.

v. Finalization of provisional assessment.

vi. 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.

vii. Tax Refund for International Tourists.

viii. Refund of tax payment on purchases made by Embassies or UN bodies.

ix. Payment of duty / tax during investigation but no/ less liability arises at the time of finalization of investigation / adjudication.

x. Year-end or volume based incentives provided by the supplier through credit notes.
Time Limit for Filing for Refund:

Application for refund has to be filed within a period of 2 years from the relevant date.

An agency of the UN Organization or any multilateral financial institution and organizations notified under UN, Consulate or Foreign embassies can claim refund of tax on inward supply of goods/services, provided the refund application is filed before 6 months from last day of the quarter in which such goods/service were received.

Procedure of obtaining refund under GST:

1. Filing Application For Refund

An application may be filed in FORM GST RFD-01 (to be certified by a Chartered Accountant) through the GSTN Portal or through a Facilitation Centre accompanied by any documentary evidence as specified in the Rules.

2. Generation of Acknowledgement

Where the application relates to a claim for refund from the electronic cash ledger, an acknowledgement in FORM GST RFD-02 shall be auto-generated for future references and sent to the applicant via email and SMS. In any other case, an acknowledgement in FORM GST RFD-02 shall then be made available to the applicant within 15 days, after scrutiny by proper officer. Any deficiencies shall be communicated to the applicant in FORM GST RFD-03, requiring him to rectify the same.

Where the refund application is below Rs. 5 lacs, a declaration shall be made by the applicant that the amount of refund has not been utilised/transferred to any other person. Where such application exceeds Rs. 5 lacs, a document evidencing the amount paid by the applicant shall be attached along with the declaration.

There shall be no refunds where the amount of refund is less than Rs. 1,000/-

3. Scrutiny of Refund Application

Refund application and relevant documents submitted by the applicant are scrutinized within a period of 30 days of filing the refund application. If the amount of refund exceeds a prescribed amount, filed application will have to go through the pre-audit process for sanctioning the refund.

If the application after scrutiny by a proper officer qualifies for a refund, then an order shall be passed to that extent.

4. Grant of Provisional Refund

An authorized officer can issue a provisional refund order in FORM RFD-04 of an amount of 90% of the refund claim, in case Such a provisional refund can be made when the taxpayer:

When the refund relates to amount arising out of export of goods/services, the proper officer shall make an order in FORM GST RFD-04, sanctioning the amount of refund due on a provisional basis of an amount of 90% of refund within 7 days from the date of acknowledgement.

Applicant can avail provisional refund if he:

i. Has not been prosecuted for evading taxes for an amount exceeding Rs. 250 lacs over a period of 5 years.

ii. Has a GST compliance rating of more than 5 out of 10.

iii. Has no appeal or review pending with respect to refunds.

He shall issue a payment advice in FORM GST RFD-05 for the amount sanctioned and the same shall be electronically credited applicant's bank account.

5. Order Sanctioning Refund

In cases other than mentioned above, the refund application shall be processed within 60 days from the application date.

Where the proper officer is satisfied that the amount of refund is payable to the applicant, he shall make an order in FORM GST RFD-06 and issue a payment advice in FORM GST RFD-05 within 60 days from the date of application, for the amount of refund and the same shall be electronically credited to applicant's bank account.

Where the proper officer is satisfied that the whole/part of the amount claimed as refund is not admissible 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 15 days, and after considering the reply, make an order sanctioning the amount of refund in whole/part, or rejecting the refund claim (after giving the applicant a reasonable opportunity of being heard).

Rejection of Refund Claim

Where the proper officer is satisfied that the amount of refund is not payable to the applicant, he shall make an order in FORM GST RFD-06 and issue an advice in FORM GST RFD-05, for the amount of refund to be credited to the Consumer Welfare Fund.

Where any deficiencies have been communicated or any amount (fully or partly) claimed as refund is rejected, the amount debited shall be re-credited to the electronic credit ledger.

For this purpose, a refund shall be deemed to be rejected if the appeal is finally rejected or if the claimant gives an undertaking in writing to the proper officer that he shall not file an appeal.

Interest on Delayed Refunds

According to the recommendations from the Subramanian committee, a refund application is to be processed within a period of 90 days, on delay of which an 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, the refunds shall be processed within 7 days. If it is delayed more than 2 weeks, then refund will be provided with interest.

The proper officer shall make an order along with a payment advice in FORM GST RFD-05, specifying therein the amount of delayed refund, period of delay for which interest is payable and the amount of interest payable, and such amount of interest shall be electronically credited to the applicant's bank account.

Refund of Tax to Certain Persons

Any person eligible to claim refund on inward supplies shall apply for refund in FORM GST RFD-10 once every quarter along with a statement of inward supplies of goods/services/both in FORM GSTR-11, prepared on the basis of statement of outward supplies furnished by corresponding suppliers in FORM GSTR-1.
The acknowledgement for the same shall be issued in FORM GST RFD-02.
Refund shall be available if-

§ inward supplies were received from a registered person against a tax invoice, and the supply price covered under a single tax invoice exceeds Rs. 5000 excluding tax paid

§ name and GSTIN/UIN of the applicant is mentioned on the tax invoice

§ such other conditions as may be specified in the notification are satisfied.

- Compiled by Kashika Ahuja

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