WHEN WE CLAIM REFUND UNDER GST
Divyanshu Sahni & Associates
COMPANY SECRETARIES
Office: -512B, 5th Floor, Kirti Shikhar Building, District Centre, Janak Puri, New Delhi -110058
Email: info@finlegalforte.com Mob; +91-9871027426
Introduction
Timely refund mechanism is
essential in tax administration, as it facilitates trade through the release of
blocked funds for working capital, expansion and modernisation of existing
business. The provisions pertaining to refund contained in the GST law aim to
streamline and standardise the refund procedures under GST regime. Thus, under
the GST regime, there will be a standardised form for making any claim for
refunds. The claim and sanctioning procedure will be completely online and time
bound, which is a marked departure from the existing time consuming and
cumbersome procedure.
CIRCUMSTANCES FOR REFUND
CLAIMS
The relevant date provision embodied in Section 54 of the
CGST Act, 2017, provision contained in Section 77 of the CGST Act, 2017 and the
requirement of submission of relevant documents as listed in Rule 1(2) of
Refund Rules is an indicator of the various situations that may necessitate a
refund claim. A claim for refund may arise on account of:
1. Export of goods
or services
2. Supplies to SEZs
units and developers
3. Deemed exports
4. Refund of taxes
on purchase made by UN or embassies etc.
5. Refund arising on account of judgment,
decree, order or direction of the Appellate Authority, Appellate Tribunal or
any court
6. Refund of
accumulated Input Tax Credit on account of inverted duty structure
7. Finalization of
provisional assessment
8. Refund of
pre-deposit
9. Excess payment
due to mistake
10. Refunds to
International tourists of GST paid on goods in India and carried abroad at the
time of their departure from India
11. Refund on
account of issuance of refund vouchers for taxes paid on advances against
which, goods or services have not been supplied
12. Refund of CGST
& SGST paid by treating the supply as intrastate supply which is
subsequently held as inter-State supply and vice versa.
Time Limit for
Filing GST Refund Request
1.
GST Refund Claim on Exports
Treatment for Zero Rated Supplies
All exports (whether of goods or services) as
well as supplies to SEZs have been categorized as Zero-Rated Supplies in the
IGST Act.
“Zero rated supply” under Section 16
of the IGST Act, 2017 means any of the following supplies of goods or services
or both, namely:
(a) export of
goods or services or both; or
(b) supply of
goods or services or both to a Special Economic Zone developer or a Special
Economic Zone unit.
On account
of zero rating of supplies, the supplier will be entitled to claim input tax
credit in respect of goods or services or both used for such supplies even
though they might be non-taxable or even exempt supplies.
Every person making claim of refund on account
of zero rated supplies has two options:
Thus, the GST law allows the flexibility to the exporter
(which, will include the supplier making supplies to SEZ) to claim refund
upfront as integrated tax (by making supplies on payment of tax using ITC) or
export without payment of tax by executing a Bond/LUT and claim refund of
related ITC of taxes paid on inputs and input services used in making zero
rated supplies.
2.
Process Grant
of Provisional Refund in Case of Zero Rated Supplies
3.
PAYMENT OF WRONG TAX
4.
Claim by a Person who has Borne the
Incidence of Tax
5.
Refund
to UN Bodies and Other Notified Agencies
Supplies made to UN bodies
and embassies may be exempted from payment of GST as per international
obligations. However, this exemption is being operationalized by way of a
refund mechanism. So, a taxable person making supplies to such bodies would
charge the tax due and remit the same to government account. However, the UN
bodies and other entities notified under Section 55 of the CGST Act, 2017 can
claim refund of the taxes paid by them on their purchases.
TIMELINES
FOR REFUND
6.
Refunds to
Casual/Non-Resident Taxable Persons
Casual/Non-resident taxable person has to pay tax in advance at
the time of registration. Refund may become due to such persons at the end of
the registration period because the tax paid in advance may be more than the
actual tax liability on the supplies made by them during the period of validity
of registration period. The law envisages refund to such categories of taxable
persons also.
TIMELINES FOR REFUND
WHEN WE CLAIM REFUND UNDER GST
Reviewed by CS DIVYANSHU SAHNI
on
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