Once you have completed the necessary GST payments, you’ll know whether you’ll receive any return. Upon meeting the eligibility criteria, you will be required to initiate a reimbursement claim through the submission of the GST refund form RFD-01.
The GST reimbursement process can be technical. Furthermore, a delay or a mistake in filing could cause your request for a refund to be denied. So, follow the conditions and terms for a GST refund. Moreover, a delay or incorrect filing could result in a rejection of the GST refund and filling out the form in a timely manner and on time.
What exactly is the GST refund procedure?
To ease the process of GST refunds, the tax authorities have converted the process into an online one. You can now claim the refund online with your registered GST account within two years after your claim date. However, the date for claiming will depend on the circumstances that you claim
Claiming GST Refund
Section 54 of the GST Act provides that any of the following scenarios could need a GST return application submitted by the taxpayer.
- Taxes paid on zero-rated purchases of services or goods
- Export of services or goods
- The supplies are made available to SEZs units as well as SEZ developers
- Refund of tax due to the sale of goods that are deemed exports
- Refund of tax on a purchase made through the UN or embassies.
- Refunds are made based on a judgment, decree, order or order of the Appellate Authority, Appellate Tribunal or any other court.
- Refund of the accumulated Input Tax Credit due to the inverted duty structure
- Finalisation of the provisional assessment
Refund of Pre-Deposit of GST
These refunds include:
- Inexpensive payment due to an error
- The refunds are made to International tourists for GST paid on items purchased in India and then carried to another country at the time of departure from India.
- Refund on account of the issue of refund vouchers to pay taxes paid for advances which products or services haven’t been provided
- The refund of CGST and SGST by considering the supply as an intraState supply, which is later regarded as inter-State supply and reverse
GST Refund Process
In India, GST laws have established standardized procedures for processing GST refund claims. Taxpayers are required to submit all refund claims online through an approved form on the GST Common Portal. Additionally, monthly returns must be filed for refund claims related to the remaining credit balance.
Upon filing a refund request, an acknowledgment will be provided within 14 days. Subsequently, the designated officer will notify the state regarding the request within the same timeframe.
If any deficiencies are identified in the application, the refund request may be returned to the applicant along with a list of the shortcomings, allowing the applicant to resubmit the application. However, if no errors or defects are found, GST refund claims included in the application should be approved within 60 days from the date of receipt.
It is important to note that officers are not permitted to issue a deficiency memo after the 14-day review period for the GST refund request.
In the event that the specified timeframes are exceeded, or the mandatory timeframe is not met, the taxpayer becomes liable for paying interest in addition to the refund amount.
Procedure for Filing Refund Request
A taxpayer may claim the refund of any tax and penalty, penalties, fees, or another amount he has paid by filing an online application in GST RFD-01 on the GST Common Portal or a GST Facilitation Centre.
If the refund is based on the balance of an electronic cash ledger, the taxpayer can get the GST refund once he has submitted the tax returns for the relevant tax period on the form GSTR-3, GSTR-4 or GSTR-7 Form.
How to apply for the form RFD-01 for most kinds of GST refunds
RFD-01 is required to be filed for the types of GST refund claims:
- The excess cash balance in an electronic cash ledger, or the tax excess.
- IGST is charged on the service exports (with tax payment).
- Accumulated ITC from exports of goods and services without the payment of tax.
- Accumulated ITC because of the supplies made to SEZ unit or SEZ developer (without tax payment).
- ITC accrued due to an inverted tax structure (tax on inputs that is higher than the tax on outputs).
- If the beneficiary of considered exports has paid the tax on imports that are deemed to be exported and has declared ITC in respect of the tax they paid on their credit account in electronic form, then the buyer of the deemed exports is entitled to receive a refund of the tax amount they paid (on the condition that the provider of such declared exports is not able to demand an ITC refund).
- Tax paid on the supply made to SEZ units or developers (with the tax payment).
- Taxes are paid on intrastate supply, which is later deemed an interstate supply and reverse.
- If a seller of deemed exports has paid tax on deemed supplies without having to collect tax from the purchaser of such deemed exports. Then it can claim the tax as a refund amount (on an acknowledgement that the purchaser or recipient of these deemed exports does not seek any refund).
- In the event of Assessment, Provisional Assessment, appeal, or any other order.
- Additionally, there is a clause to claim a refund on “Any other grounds” in RFD-01.
- It is important to ensure that the information is consistent for the invoices in GSTR-1, if applicable and RFD-01, where applicable. In some circumstances, a certification from a chartered accountant or cost accountant must be included.
Steps to Submit Refund Request
Follow the steps below to submit a refund request in RFD-01:
Step 1: Login on the GST portal. Click on the tab called ‘Services’. Select ‘Refunds’, then choose the ‘Application for Refund Option.
Step 2: On the next page, you will be asked to select the reason for the refund or the type of refund and then click create a refund application’.
Step 3: Choose the time frame for the refund to be granted and choose either ‘Yes’ or ‘No on the dialogue box if you wish to make a non-refundable refund’.
If there is no refund application, the taxpayer may mark the declaration and then file the application with EVC or DSC or EVC.
This procedure does not apply to different kinds of refunds, such as excess cash balances in the ledger and intrastate supply later categorised as interstate supply, and the reverse, assessment, appeals, provisional assessments, or any other type of order.
Step 4: Fill in the information on the appropriate page, which is displayed depending on the refund type chosen in the previous step.
Step 5: Enter the bank account information for the refund, then upload any supporting paperwork and declarations for the required refunds.
As many as ten documents can be uploaded with file sizes limited to 5MB per document.
Check out the application, then click on Save. The saved application is available for 15 days, pending the taxpayer’s actions. Press the “Proceed” button after checking the boxes for undertaking and self-declaration.
Step 6: Create RFD-01 with EVC as well as DSC.
The application reference number, or ARN, is generated and displayed in the display. Taxpayers can track their taxes using this number. The ARN can also be delivered to an email address and a mobile number.
The application for a refund is then transferred to the person who processes refunds. The application will be processed, and the refund status will be up-to-date.
Final Thoughts
Claim GST refund to India is a matter of adhering to standard procedures. Taxpayers have to submit the refund claim online via GST Common Portal. GST Common Portal using the approved form. The timely filing of monthly tax returns is essential in the case of refund claims relating to the balance of credit remaining.
Refunds are subject to an extensive review by the designated officer, who will acknowledge that request in 14 days. If there is a problem, applicants can apply to correct any errors. After the application has been verified as error-free, refund claims must be accepted within 60 days. The interest could be assessed when timeframes are not met. A thorough understanding and adherence to the procedure are essential for claiming a GST refund. For more details, connect with our experts at StartupFino.
