Goods and Services Tax, also known as GST was implemented in India in 2017. This was a great change in the history of taxation. Goods and Services Tax is an indirect tax that replaced many indirect taxes in India like VAT, excise duty, service tax, etc., and compiled them into one that is GST. It brings maximum goods and services under its ambit. It makes the tax system systematic and corruption-free. Once a business gets registered under GST, it gets GST Registration and then it has to pay GST. Ignorance can result in penalties which will be levied per day. Hence there is no chance of ignorance. GST is helpful for the government while implementing and executing various necessary schemes for the upliftment of society and people. under the GST there is a concept called refund in GST. The current blog will particularly discuss the same concept.
What is GST Registration?
Under the Goods and Services Tax Act, every business owner whose turnover is up to 20 lakh or more needs to register as a taxpayer on the goods and services official portal, and that registration is known as GST registration. There are two more circumstances where one needs to register as a taxpayer and in these two circumstances turnover doesn’t matter. The first one is when a business owner is running their business on e-commerce websites and the second is if the business is interstate.
Whenever one gets registered on the goods and services official portal as a taxpayer, he or she will get a unique 15-digit registration number. This unique 15-digit number is known as a goods and services tax identification number, generally known as GSTIN. Only a person having this number can claim a refund in GST. A person or entity without having this number or is not a registered taxpayer cannot claim a refund in GST.
What is a GST Refund?
“Refund in GST” itself suggested its meaning. Refunds are always done when there is something excessive. If there is nothing extra there will be no refund. Similarly in GST when the taxpayer paid the extra tax or we can say the taxpayer has paid more than he or she needs to pay, then he or she can claim back that amount which is extra. After his application for a refund the department will check and if the claim is right, an extra amount will be given back to the taxpayer by the GST department and this is known as a refund in GST.
Who is Eligible to claim a Refund in GST?
Under the Goods and Services Tax Act, the eligibility criteria have been given to provide a refund in GST. Only eligible persons or entities can claim a refund in GST. Go through the points given below to check the eligibility to get a refund from the GST department:
- When due to any kind of mistake like a mistake in the calculation if the taxpayer had paid excess money he or she can claim a refund
- In an export transaction that involves a cumulative balance of input credits, a refund can be claimed.
- If a Provisional assessment indicates that you are eligible to claim a refund, you can proceed for the same without any hesitation or doubt
- If you have paid GST on items that are either exempt from taxation or subject to a lower tax rate, this can lead to an accumulation of input tax credits in your GST ledger. You have the opportunity to claim a refund for this accumulated GST amount.
- If a product is obtained from United Nations partners or a foreign embassy, they have the eligibility to request a GST refund.
Provision of Law Related to Refund in GST
Under the Goods and Services Tax Act, 2017 from section 54 to section 58 in Chapter 11 provisions regarding refund in GST has been given in detail. For a better understanding of the refund concept read the provisions of GST law which are given below:
Refund of Tax
Under section 54 of the Goods and Services Tax Act, 2017 refund of tax provision has been given. under this provision any person who is claiming a refund must file an application for the refund. This application must be accompanied by such documentary evidence which establishes that a refund is due to the applicant. But if the amount is less than 2 lakh Rupees there is no need to attach any kind of documentary evidence. The mere filing of a declaration will work here. After receiving the application officer will examine the application and if satisfied he will pass the order to refund and the amount will be refunded to the consumer welfare fund given under section 57 of the GST Act.
Refund in Special cases
As per section 55 of the GST Act, there are certain agencies that can claim refunds if the government on the recommendations of the Council specifies them. These agencies include any agency that is particularly related to the United Nations Organization or any Multilateral Financial Institution. Also includes the Embassy of foreign countries and any other person or class of persons. All the mentioned agencies have the right to request a tax refund for taxes they’ve paid on the supplies of goods or services, which have been duly notified and received by them.
Interest in Delayed Refunds
Section 56 of the GST law states that if any tax ordered to be refunded to any applicant is not refunded within sixty days from the date of receipt of application then in such scenario interest will be levied on the principal amount and the interest rate must not be exceeding 6%. Also if any claim of refund arises from an order that was passed by an adjudicating authority or Appellate Authority or Appellate Tribunal or court and the same is not refunded within sixty days from the date of receipt of the application filed consequent to such order then here as well interest will be levied. And the interest amount will not be more than 9%.
Utilization of Fund
As per section 58 of the Goods and Services Tax Act, 2017 all sums credited to the consumer welfare fund that is given under section 57 of the GST Act, shall be utilized by the Government for the welfare of the consumers. The Government or the authority specified by the government for the same purpose shall maintain proper and separate account records related to the consumer welfare funds. Also needs to prepare an annual statement of accounts in such form as given in the law. These annual statements of accounts must be prepared in consultation with the Comptroller and Auditor-General of India.
Conclusion
In India, the Goods and Services Tax (GST) system was implemented a few years back. It allows eligible taxpayers to claim a refund in GST for overpaid taxes. Typically resulting from calculation errors, export transactions, provisional assessments, or lower tax rates. Specific provisions for GST refunds are detailed in Sections 54 to 58 of the GST Act, including the application process, eligibility criteria, interest on delayed refunds, and the utilization of the Consumer Welfare Fund, ensuring a streamlined and equitable tax system for businesses and consumers.
