GST Input Tax Credit Refund- Cases, Process, Documents

GST Tax liability is of Rs 100 and you have paid Rs 1,000. Ah!! Now what to do? Is there any provision to get refund of the excess amount paid? No worries. This article contains the solution for your Problem related to GST Input Tax Credit.

Is Government refunding for the excess payment of tax?

In India, Goods and Service Tax (GST) has to be deposited monthly to reduce tax burden of businesses. Since business transactions take time to process, you might end up paying more taxes than you owe. If this happens, GST refund can be claimed easily from the government.

What’s the time limit for claiming GST Refund?

GST claims for refunds must be filed within two years of the relevant date. The different ‘relevant date’ defined for different scenarios is as follows-:

In case of

Relevant Date

Goods exported by sea or air Date on which the ship or the aircraft in which such goods are loaded, leaves India.
Goods exported by land Date on which such goods pass the frontier
Goods exported by post Date of dispatch of goods by the Post Office concerned to a place outside India
Deemed Export The date on which the return relating to such deemed exports is furnished
Excess payment of GST Date of payment
Export of Service- supply of services completed prior to the receipt of payment Date of receipt of payment in convertible foreign exchange
Export of Service- payment for the services received in advance prior to the date of issue of invoice Date on which Invoice was issued

If the claim order is approved, the refund must be sanctioned within 60 days from the date the claim application is received. An interest on the withheld refund at a rate of 6 percent after 60 days shall be paid along with the refund amount by the tax authorities.

Three important Reasons to File GSTR- 9

If the claim order is passed by authority / court and the payment delays 60 days, the interest on the deferred refund will be paid at 9 percent per annum.

Cases where Input Tax Credit Refund can be claimed:

  • Export of goods or services
  • Supplies to units and developers in special economic zones.
  • Pre-deposit refund.
  • Refund arising from the judgement, order, a decree or any law court.
  • Excess payment due to an error.
  • Refunds due to the issuance of refund vouchers for advance payment of taxes, for which services or commodities have not been supplied.
  • Refund to foreign tourists on GST paid for commodities within the country and carried abroad on departure.
  • Refund of CGST and SGST paid by considering the supply in the course of interstate trade or commerce.

GST Collection 6% up in November, crosses 1 Lakh crore

You can also claim Refund if there is unutilized input tax credit but only in the following two cases under GST:

  • Unutilized input tax credit on zero-rated goods/services on which no payment of tax was made can be claimed as refund.
  • Accumulation of unutilized ITC due to higher tax rate on inputs than the output supplies (other than zero-rated/exempted goods)

Note: No refund of unutilized ITC would be allowed under the following cases:

  • If the unutilized ITC is for GST paid on goods exported out of India which attract excise duty.
  • If the supplier of goods has availed duty drawback on the excise duty paid or claims the refund on the integrated tax paid on such supply.

New 10% Rule on ITC Restriction Simplified

How to Apply for GST Refund

For claiming GST Refund under GST, you have to fill Form RFD-01. GST refund must be claimed within 2 years of the relevant date of the refund application. Following are the Steps for claiming Refund are-:

  • Login to the portal of GST.
  • Select Refund, then select application for Refund Option.
  • Choose the refund form
  • Fill out the required details. It will generate the ARN number.
  • Take a print with the ARN number specified on it.
  • Submit it to the relevant Jurisdictional GST officer along with the applicable annexes.

Once you submit the GST refund form, you will receive a confirmation of an auto-generated acknowledgement form GST-RFD-02.  In the case of any discrepancies found while calculating the tax during the claim process, a GST-RFD-03 form will be sent to the taxpayer for corrections in the application form.

NOTE: The taxpayer must send a declaration during the filing of the GST refund that the refund sum will not be transferred or used to an individual or any third party.

Points to keep in mind during GST Audit

Documents required for claiming GST Input tax credit Refund

The following documents must be submitted for GST refund claim:

GST Refund for Exports

The relevant invoice shall be submitted. A statement containing the number and date of shipping bills or export bills and the number and date of the corresponding export invoices, along with the invoice.

In the case of GST refund on account of the export of services, the relevant bank realisation certificates evidencing receipt of payment in foreign currency are also required to be submitted, along with the tax invoices.

14 Blocked Input Tax Credit (ITC) under GST

GST Refund for Supply to SEZ

If a claim for GST refund is made by the supplier to an SEZ unit, an acknowledgement of receipt of such goods / services in the SEZ together with the tax invoice should be submitted. Furthermore, a declaration from the SEZ unit is also required to the effect that they have not availed the supplier’s tax input tax credit.

GST Refund for Accumulated Input Tax Credit

You are required to submit copies of invoices that can show that the tax you paid is higher than you are liable to pay.

GST Refund on Account of Order

In case of claim of GST refund on account of any order or judgment of appellate authority or court, the reference number of the order giving rise to refund should be given along with the relevant tax invoices.

 If a claim for GST refund is less than Rs. 2 Lakhs, then the applicant’s self-declaration must be submitted to the effect that the tax incidence has not been passed on to any other individual along with other documents.

A certificate from a Chartered Accountant / Cost Accountant must be submitted together with the documents for GST refund claims exceeding Rs. 2 Lakhs.

Nil Rated, Zero Rated, Non-Taxable and Exempted Supply

Time in processing of GST input tax credit Refund Claim

GST refunds are usually processed within one month after the claim has been filed without any error. The length, however, varies depending on the amount of GST refund to be processed. The application may be forwarded in an audit or scrutiny.

If there is no mistake in the application form, the amount will be credited to the taxpayer’s account.

On the contrary, if the adjudicating body finds that you are cheating or committing any fraud, the amount of that refund will be transferred to the Consumer Welfare Fund.

What are the GST Penalties and prosecution?

Refund in case of Export

In the case of GST refund process resulting from the export of goods and services, the authorized officer has the right to issue a provisional refund order claiming 90% of the refund by GST-RFD-04. This kind of provision is only applicable if he taxpayer has a clean record for not evading taxes for amounts above Rs 250 lakh over a period of 5 years. The GST compliance score of the taxpayer is five or more out of ten.

The new process of GST reimbursement is effective and comprehensive. The mechanism is planned with the convenience of both manufacturers and exporters in mind and follows a sequence of invoices for processing the claim for GST. Tax refund, which took years to pass before, is now processed within 60 days.

For any question visit us at forum

The author of above article is Sneha Bhalotia

Disclaimer:The article or blog or post (by whatever name) in this website is based on the writer’s personal views and interpretation of Act. The writer does not accept any liabilities for any loss or damage of any kind arising out of information and for any actions taken in reliance thereon.  It is prepared based on understanding of provisions as stood applicable as on date.
Also, and its members do not accept any liability, obligation or responsibility for author’s article and understanding of user.
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