Process, Rules, and Claims for GST Refunds

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by Ankpal November 08, 2021

GST in India was introduced as a powerful and efficient way to impose taxes on exporters or manufacturers. This not only incorporates an effective way to levy taxes, but it additionally possesses a better flow of receiving GST refunds when a taxpayer gets imposed an excess amount.

The current GST tax composition enables its users to receive their GST refunds quickly by enabling well-organised inspection of the GST imposed on the person or the entity. Also, this processing of up-to-date GST refunds will benefit businesses and expedite trade through the discharge of blocked working capital and readily get managed with the help of GST accounting software.

How to claim GST refund?

You should always remain familiar with who can claim a refund in GST. Mentioned below are the most common rules to claim a GST refund:

  • Tax paid on inward supply of services or goods shipped or on inputs or input aids employed in services or goods exported. However, if the goods are subject to export duty, you cannot claim a refund.
  • Unused ITC of output being zero-rated supplies or exports.
  • Unused input tax credit due to reversed tax structure as the tax rate on inputs is more than the tax levied on manufacturing supplies.

GST refund process

The GST refund process must get carried out within two years from the relevant date discussed above. Also, this 'relevant date' in the GST refund process differs in different scenarios mentioned below.

  • Goods shipped by sea or air – Date on which the vessel or aeroplane in which the goods get placed leaves India
  • Goods transported by land – Date on which the goods cross the country.
  • Goods consigned by post – Dispatch day of goods by the concerned post office.
  • Services transported, where the service supply is complete before the payment release – Day when the payment arrives.
  • Services exported, where the payment was received in advance, before the date of issuance of invoice – Date of invoice issue.

Applications for GST refund claims

Once you are eligible to file a claim for a GST refund, you can make a refund claim application by filing a GST Refund Form RFD-01. You can claim the GST refund within two years of the relevant date after filing the refund application. However, if you fail to file a refund claim with the stipulated timeline, your credits can get blocked forever, and you might never receive the GST refunds.

In addition, if there are any inconsistencies in the refund claim process, a GST-RFD-03 form will get auto-generated and transmitted to the taxpayer for revisions in the application form, post which the refund amount will get transferred to your account.

Order for GST refund claims

If the GST refund is on behalf of the export of services or goods, the appointed officer will reimburse 90% of the cumulative amount claimed as a refund in Form GST RFD-4. After due verification of the records supplied, the officer will pass an order for the ultimate settlement of the refund claim. Also, if the commissioning officer gets convinced that the complete or part of the refund amount claimed in the application is refundable, he will pass an order for the payment refund in Form GST RFD-5.

Exceptional scenarios of GST refund claims

Listed hereunder are a few exceptional scenarios of GST refund.

  • Tax on supply of goods considered as deemed exports such as exports in SEZ.
  • Tax is refundable as an outcome of a decree, judgement or on the command of an Appellate Tribunal.
  • Tax incorrectly accumulated and collected with the Central or State Government.

To claim your GST refunds, you must follow a poignant GST refund process as the government will not provide a refund without a careful examination. Hence, always ensure keeping all your GST records well-organised by employing the best GST billing software that can help you easily furnish all the required records at the time of claiming a GST refund.

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