Brief About Refunds Under the GST Regime
Refund is an important term under GST regime. It is an important cash flow factor for most of the business.
Further, if you are planning to start your own business of selling of product or service and is required to take GST registration than this blog will be quite important for you to plan your activities.
Below are the cases in which input or output tax paid by you will be allowable to you as a refund:
- Refund of unutilized ITC in case of supplies made to SEZ without payment of tax.
- Refund of unutilized ITC in case of export supplies made without payment of tax.
- Refund of unutilized ITC in case of Inverted Tax Structure where tax rates on input is higher than that on output.
- IGST paid on export of services with payment of tax.
- IGST paid on supply made to SEZ with payment of tax.
- Refund of tax paid on deemed exports to suppliers/recipient.
- Refund of excess balance in electronic cash ledger.
- Refund as per the outcome of any assessment or appeals.
- Refund on any other reasonable ground.
But there are some exceptions also under which refund of the GST is not allowed:
- On unutilized ITC in case of export supplies where export duty is levied on such supplies. The reason is to safeguard the domestic supplies.
- Refund of ITC shall not be allowed if the supplier of goods or services avails drawback in respect of CGST or claim refund of the IGST paid on such supplies.
- Assessee has defaulted in furnishing of any return.
- Assessee has defaulted in payment of any tax, interest or penalty.
- When the proper officer has reason to believe that any tax, interest or penalty payable by the assessee is unpaid, he may deduct or adjust the same against refund amount.
- Refund may also be withheld by the commissioner appeals till the time the case is determined.
- Refund will not be payable if the refundable amount under each head of tax does not exceed ? 1,000.
Process of Applying for GST Refund:
- Refund application needs to be submitted in the form RFD-01.
- Tax Invoices are required to be uploaded with the application.
- No document is required to be furnished physically for refund application. Submission as well as processing will be done electronically only.
- Refund application should be filed within the period of 2 years from the relevant date. Relevant date is the date prescribed under GST law which is different under different circumstances of supply of goods and services.
- ARN will be generated after submission of refund application.
- Time limit for processing of the application is 15 days from the date of generation of the ARN.
- Within 15 days they may issue refund or a deficiency memo.
- Deficiency memo may be issued if any deficiency is pointed out in the application submitted for which a fresh application to be filed after correction of the deficiencies.
- The time limit of submitting the rectified application is also the same as that of original application which is within 2 years from the relevant date.