Refund under GST for Tax and ITC

Timely refund mechanism is very essential part of taxation, as it facilitates trade through release of blocked fund for working capital, expansion and modernization of existing business. In this article, we will cover the below topics:
  • Eligible Refunds of GST and ITC
  • Time limit for claiming the Refunds
  • Manner of Claiming the Refunds


Eligible Refunds of GST and ITC

A claim for refund may arise on account of :
  1. Export of Goods and Services.
  2. Supplies to SEZs units and developers.
  3. Deemed Export supplies
  4. Refund of taxes on purchase made by UN or Embassies etc
  5. Refund arising on account of Judgement, 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 Mistakes.
  10. Refund on account of issuance of Refund Vouchers for taxes paid on advances against which goods or services has not been supplied.
  11. Refund of CGST & SGST paid by treating the supply which is subsequently held as inter-state supply and vice versa.

Time Limit for Claiming Refund

Any person claiming the refund of the GST Tax, ITC 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. The relevant dates for some the cases will be:

Reason for Refund

Relevant Date

Excess Payment of GST

Date of Payment

Export or deemed export of goods or services

Date of dispatch/loading/passing the frontier

ITC accumulated on account of Inverted Duty Structure

Last date of the Financial year to which the credit belongs

Finalization of provisional assessment

Date on which tax is adjusted

Manner of Claiming the Refunds

The Government has provided a complete electronic solution for filing the refunds for the registered taxpayers. All steps of submission and processing in this regard shall be taken electronically. The Government vide Circular 125/44/019 has laid the complete set of guidelines for filing and processing of refunds electronically. A brief about the manner of filing the refund has been given below:

Application for Refund

  • The refund application shall be filed via Form GST RFD-01 which is available once you login into your GST portal. There one has to select the reason for filing the refund and mention the month as well as the year to which the refund pertains.
  • Then, one has to specify a brief about the case and upload the relevant documents like Invoices/submissions/Payment challans etc.
  • After that once the refund application is submitted an Application Reference Number (ARN) will be generated. ARN is used for tracking the status of your Refund.

Acknowledgement/Deficiency Memo

  • The Assessing officer (AO) within 15 days of submission of Form RFD-01 shall issue an Acknowledgement via Form RFD-02 or a deficiency memo via Form RFD-03 electronically, as the case may be.
  • Deficiency Memo i.e. Form RFD-03 is issued generally when the proper supporting documents are not issued or missed. In this case, the taxpayers has to file a fresh application of refund via Form RFD-01 electronically along with all the supporting documents.

Show Cause Notice (SCN)

  • In case, the AO is of the view that the applied refund is not a valid refund and should be rejected, then the AO will issue RFD-08.
  • RFD-08 provides the ground that why the refund is proposed to be rejected.
  • This form requires the taxpayer to respond to it within 15 days of the receipt of the notice.

Reply to SCN 

  • A taxpayer who receives notice in form RFD-08 has to reply to it in Form RFD-09 along with the documents as requested in the notice.
  • On receipt of RFD-09, the AO has to assess whether the refund should be issued or not.
Refund Order & Payment Advice 

  • AO has to process the refund within 60 days of submission of application.
  • If the amount of refund is admissible an order will be issued in Form RFD-06 electronically. 
  • The refund application is processed by issuing a payment advise i.e. Form RFD-05.
Complete Adjustment/Withholding of Refund

  • RFD-07 is issued by the AO in case where refund claimed by the applicant is fully adjusted against any outstanding demand (Part-A) or refund is withheld due to certain reasons (Part-B).

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Comments

  1. TaxSavantJuly 31, 2020 at 12:46 PM

    Quite an interesting read.
    It would be great if you could add the exhaustive list of documents also to be filed along with RFD-01.

    ReplyDelete

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