GST Refunds: Step-by-Step Guide to Claim GST Refund
After obtaining GST registration, as the business evolves, there might arise certain situations whereby the registered taxpayer would demand a refund from the GST department. GST law prescribed the instances where the taxpayers can claim these GST refunds. Like the GST registration process, GST refund also has a prescribed procedure as laid down by the law. Following are the scenarios whereby the taxpayer can claim GST refund:
- Refund of tax paid in case of exports or supplies made to SEZ developer or unit with payment of IGST
- Refund of unutilised ITC Exports or supplies made to SEZ developer or unit without payment of IGST
- Refund of tax paid on supply of goods as deemed exports
- Refund of excess balance in electronic cash ledger
- Refund of tax paid on a supply which is not provided, whether wholly or partially, and for which invoice has not been issued (for e.g., tax paid on advance payments)
- Refund of tax that is wrongly collected and paid to the government (for e.g., CGST and SGST paid mistakenly by considering interstate supply as intrastate supply and vice-versa).
- Refund of IGST that is paid by a tourist leaving India on goods taken out of India by him.
- Tax that becomes refundable in consequence of an order, judgement, direction or decree of the Appellate Authority, Appellate Tribunal or any other court.
- Tax that becomes refundable upon finalization of provisional assessment.
- Refund of taxes on purchases undertaken by UN bodies, embassies etc.
- Refund of taxes to the retail outlets that are making tax-free supplies to outgoing international tourists and established in the departure area of international airports beyond immigration counters.
- Refund of advance tax deposited by a non-resident taxable person or casual taxable person.
- Refund of excess payment of taxes.
While the reasons are clear, what is the procedure to file the GST refund application? Find out here!
Procedure to File GST Refund Application
To file refund application, navigate as follows:
Login to the GST portal -> Services -> Refunds -> Application for Refundfdfill have to select the refund type. Following are the refund types from which you shall select the reason for your refund application:
Select the reason for your refund type and enter the tax period for which you need to claim the refund. Refund form RFD-01 allows you to file refund applications for tax periods relating to different financial years in a single application as well. Note that you don’t need to enter the period in case your refund application pertains to the following reasons:
- Refund of excess balance in electronic cash ledger
- Refund of tax paid on intrastate supply which is subsequently held to be the interstate supply and vice-versa
- Refund on account of assessment / provisional assessment / appeal / any other order
Once the period is entered, you can proceed with your refund application. Following are the briefs to guide you through the further steps in your refund application.
Category-2: Refund of ITC on exports of goods and services without Payment of Tax
- Statement-3 needs to be provided disclosing the invoice-wise details of purchase and sales. You can download the offline utility after you select the option ‘Refund of ITC on Export of Goods & Services without payment of tax’ and enter the tax period.
- Enter the requisite details in the excel template of Statement-3. Once entered, click on the ‘Validate and Calculate’ button to validate the details. The errors will be intimated forthwith, if any. Correct the errors and click on the above button again. Once the details are validated, click on ‘Create File to Upload’.
- A JSON file will be generated. Upload it on the portal from where you downloaded the utility by clicking on ‘Click to upload the details of Exports of goods and / or services’.
- Once uploaded, a summary of the statement uploaded will be generated. Check on the declaration and click on ‘Validate Statement’ and then ‘Proceed’.
- You can view the ‘Computation of Refund to be claimed (Statement-3A). Enter the following details:
- Turnover of zero-rated supply of goods and services (aggregate turnover)
- Adjusted total turnover
- Net input tax credit
- The maximum amount of refund will be automatically calculated. Enter the amount of refund to be claimed.
Category-3: Refund on account of supplies made to SEZ unit / SEZ developer (without payment of tax)
The steps to file refund application are the same as mentioned in Category-2. However, it should be ensured that the latest GSTR-1 and GSTR-3B shall be filed. Statement 5 shall be uploaded for claiming the refund.
Category-4: Refund on account of ITC accumulated due to inverted duty structure
Inverted duty structure is where the GST rate applicable on output supply is lower as compared to that applicable on input supply. For instance, you purchase products on which the GST rate applicable is 18%. However, the GST rate applicable on your finished goods is 5%. This results in the accumulation of ITC.
While the steps given in Category-2 shall be applicable here as well, the statement applicable shall be Statement-1A. Also, the methodology for calculating the refund amount as per the inverted duty structure shall be provided along with other supporting documentation.
Category-5: Refund by the recipient of deemed export
Again, the procedure is same as Category-2. However, the statement applicable here shall be Statement-5B. You will have to enter details like net ITC of deemed exports, the amount of refund to be claimed etc.
Category-6: Refund on account of supplies made to SEZ unit / SEZ developer (with payment of tax)
The procedure is same as Category-2. However, the statement applicable here shall be Statement-4.
Category-7: Export of Services with Payment of Tax
The procedure is same as Category-2. However, the statement applicable here shall be Statement-2.
Category-8: Tax Paid on Intrastate supply which is subsequently held to be interstate supply and vice-versa
The procedure is same as Category-2. However, the statement applicable here shall be Statement-6.
Category-9: Refund by Supplier of Deemed Exports
The procedure is same as Category-2. However, the statement applicable here shall be Statement-5B.
Category-10: Any Other (Please Specify)
In case, your reason for refund does not fall under any of the above-mentioned grounds, then you can claim refund by specifying the ground on which you wish to avail the same. Enter the amount of refund and select the bank account for receiving the refund and upload the supporting documents.
Category-11: Excess Payment of Tax
Here, you shall provide the details of GSTR-3B in which such excess payment was made. Also, you shall furnish the amount of tax that was paid in excess under each head and then proceed to file the application for refund.
Category-12: On account of Assessment / Provisional Assessment / Appeal / Any Other Order
In case, the refund becomes due to the above-mentioned reason, then you can claim the refund by filing the application online. You shall select the type of order and mention the following details:
- Demand ID
- Order No.
- Order Date
- Order Issuing Authority
Category-13: Refund of taxes on purchases undertaken by UN bodies, embassies etc.
Organizations such as United Nations bodies, Embassies etc. can claim refund by any of the following modes:
- By using GSTR-11 to generate a refund application in Form RFD-10: Here, open the GSTR-11 after being filed and click on the ‘Generate RFD-10’ button. Then select the embassy or international organisation and click on the ‘Create’ button. The details of purchases as furnished in the GSTR-11 will get auto-populated. These are editable as well. Select the bank account and proceed to file the application.
- Directly using Form RFD-10 from the dashboard after login into the GST portal: Here, you shall navigate as follows:
- Login to the portal -> Services -> Refunds -> Application for Refund
From the dashboard, select the Embassy / International Organisation and click on the ’Create’ button. The details will get auto-populated from the GSTR-11 filed. You can edit the amount as required. Select the bank account and proceed to file the application.
Procedure After Filing Refund Application
- After the application has been filed, the tax officer will scrutinise the application. A system-generated GST RFD-02 will be generated that serves as the acknowledgement for filing refund application. The acknowledgement is usually generated within 15 days from the date of the refund application. For certain refund applications, provisional refunds can be granted in RFD-04 within 7 days from the date of generation of the acknowledgement.
- In case the officer finds the application to be incomplete or deficient in any respects, then a deficiency memo will be served in form RFD-03. After the issue of the deficiency memo, the amount debited from the electronic cash or credit ledger shall be recredited to the respective electronic ledgers by an order in form PMT-03. In such a case, a fresh application for refund shall be filed.
- In case the refund application is found to be complete in all respects, then the refund shall be sanctioned by the issue of Form RFD-06. The payment order shall be passed in RFD-05.
- In case the refund is withheld after being sanctioned for any reason, then the order for withholding shall be passed in form RFD-07. In such a case, RFD-05 shall not be issued.
Following are the detailed steps to claim GST refund from the department.
Author : Dipen
Date : 13-Jul-2022