Refunds under GST – Documents required, Time Limit, Interest
Refunds under GST - Time Limit for claiming GST Refund
- What is a Refund under GST?
- Time Limit for claiming GST Refund
- Forms for refund
- Documents required for filing GST refund
- Interest on Delayed refund
- Grant of provisional refund for zero-rated supplies
- GST refund in case of exports without payment of Tax
- GST refund in case of Inverted duty structure
- Calculation of GST Refund
What is a Refund under GST?
A person can apply for a GST refund within two years of the relevant date in a prescribed form and manner. An individual can claim such a refund in his or her regular return if the refund is related to an electronic cash ledger credit balance. If the return is less than Rs. 1,000, the applicant will not receive any money back.
Time Limit for claiming GST Refund
The time limit for claiming the GST refund is 2 years from the relevant date. The Relevant date is different in different scenarios. Here are the dates for some cases:
CASES FOR CLAIMING THE REFUND | RELEVANT DATE |
Goods exported through air or sea | The date on which such ship or aircraft leaves India. |
Goods carried by a land vehicle | Date when the goods cross the land frontier of the country |
The goods sent through the post | Date of dispatch of goods |
Services performed after receipt of an advance | Invoice date |
Excess input tax credit left unutilized | End of the financial year |
Goods supplied for deemed exports, i.e., supply to SEZ or 100% EOU | Return filing date related to such deemed exports filed. |
Excess payment of GST | Date of payment of tax |
Tax paid following a provisional assessment | The date on which tax was adjusted |
Forms for Refunds
S no. | Form no: | Purpose |
1 | GST RFD-01 | Refund Application form –Annexure 1 Details of Goods –Annexure 2 Certificate by CA |
2 | GST RFD-02 | Acknowledgement |
3 | GST RFD-03 | Notice of Deficiency on Refund Application |
4 | GST RFD-04 | Sanction Order for a Provisional Refund |
5 | GST RFD-05 | Advice on Bank Payments |
6 | GST RFD-06 | Order for a provisional refund sanction issued under section 54 (5) |
7 | GST RFD-07 | Refund adjusted against outstanding demand |
8 | GST RFD-08 | Give reasons why your refund application should be rejected. |
9 | GST RFD-09 | Reply for form GST RFD-08 |
10 | GST RFD-10 | Refund Application under Section 55 |
Documents required for filing GST refund
Refund applications must be accompanied by documentary evidence in Annexure I in FORM RFD-01, per Rule 89(2) read with Section 54(4) of the CGST Act. Documentary evidence may differ in the following situations :
(i) Export of goods: – A notice stating the quantity and date of shipping bills or bills of export as well as the quantity and date of the necessary export invoices
(ii), Export of services:- A statement that lists the quantity and date of invoices as well as any appropriate bank realisation certificates or foreign inward remittance certifications.
(iii), Deemed exports:– This is the Statement that includes the quantity and date of invoices as well as any other proof that may be requested in this regard.
(iv) Difference in supply nature:- A statement showing the details of transactions considered as intra-State supply but which is subsequently held to be inter-State supply.
(v) Excess payment of Tax:- A document that includes information about the amount of the claim for tax overpayment.
Interest on Delayed refund
If the refund is not paid within sixty days from the receipt of application, interest of 6% or lower (Rate yet to be decided) will be payable to the applicant on the date immediately following the expiration of sixty days from the date of receipt of application until the date of refund.
Refunds resulting from orders passed by adjudicating authorities, appellate authorities, appellate tribunals or courts that are not refunded within sixty days of the receipt of an application filed in response to such orders are subject to interest at the rate of 9% or lower (Rate not yet notified).
Grant of provisional refund for zero-rated supplies
A proper officer is required to sanction a provisional refund of ninety percent of the GST refund amount within seven days of application if the prima facie refund is in compliance with section 54 of the CGST Act. To give a provisional refund, the proper officer must issue Form RFD 04. The aforesaid provision is applicable subject to the following conditions:
- The person requesting a refund has not, during any five-year period immediately preceding the tax period to which the refund request belongs, faced legal action for any violation of the Act or legislation already in place where the amount of tax avoided exceeds 250 lakh rupees.
- The applicant’s rating for GST compliance, if one is available, must be at least five out of ten.
- No proceedings of any appeal, review or revision are pending on any of the issues which form the basis of the refund and if pending, the same has not been stayed by the appropriate authority.
GST refund in case of exports without payment of Tax
The amount that can be claimed as a refund for exports of goods, services, or both without paying tax is outlined in Sub-Rule 4 of Rule 89. The following formula is to calculate the input tax credit refund:
Maximum Refund Amount =(Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) x Net ITC ÷ Adjusted Total Turnover
Here
1, “NET ITC” refers to the input tax credit received for goods and services during the relevant period;
2, “Adjusted Total turnover” refers to the turnover in a state or union territory during the relevant period that excludes the value of exempt supply other than zero-rated suppliers;
3, “Turnover of zero-rated supply of goods” refers to the total amount of zero-rated supplies of goods made during the relevant period without payment of tax under a bond or letter of undertaking, excluding turnover of supplies for which a refund is requested in accordance with sub-rules (4A) or (4B) or both;
4, “Turnover of zero-rated supply services” refers to the value of zero-rated supply of services delivered under a bond or letter of undertaking without payment of tax, defined as follows: –
Payments received during the relevant period for zero-rated services supplied and zero-rated services supplied for which payment had been received in advance in any period prior to the relevant period for services supplied in zero-rated form. In the case of zero-rated services supplied during the relevant period, advances have been received.
GST refund in case of Inverted duty structure
According to Rule 89, Sub-rule 5 refers to the amount of refund on account of inverted duty structures. Input tax credits shall be refunded according to the following formula
Maximum Refund Amount = (Turnover of inverted rated supply of goods and services X Net input tax credit / Adjusted total turnover) – Tax payable on such inverted rated supply of goods and services
Where, –
1, The “turnover of inverted rated supply of goods” is the value of the inverted supply of goods made during the relevant period;
2, “Tax payable on such inverted rated supply of goods” means tax payable under the same head, i.e. IGST, CGST, SGST;
3, An “Adjusted Total Turnover” is the turnover in a State or a Union Territory, as defined by clause (112) of section 2 of the CGST Act, excluding the value of exempt supplies other than inverted-rated supplies;
The following example will help you understand the above formula:
A manufacturer, ABC Limited, specialises in the manufacture of cloth bags. It purchases raw materials after paying GST at a rate of 12%; on the sale of finished goods, GST is collected at a rate of 5%. A large sum has been collected as ITC because input tax is higher than output tax.
Calculation of GST Refund
Suppose Mr. ABC’s GST liability or the month of July is Rs. 50,000, due to some mistake he has made a GST payment of Rs. 5,00,000.
However, Mr. ABC has made the excess payment of Rs. 4.5 lakh which he can claim as a refund.
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