A timely refund mechanism is essential in tax administration, as it facilitates trade through the release of blocked funds for working capital, expansion and modernization of existing business. Refund provisions in GST are more transparent as compared to provisions contained in the earlier indirect tax regime. Also, the claim and sanctioning procedure are primarily online and time bound.
The taxpayer needs to apply in the prescribed format on the GST portal within the stipulated period and the application must be supported by relevant documents, such as invoices, shipping bills, and bank statements.
The GST authorities will process the refund claim and may undertake scrutiny to verify the eligibility of the taxpayer for the refund. Upon verification, the refund amount will be credited to the taxpayer’s bank account electronically.
The applicant needs to file the requisite form online in the GST portal or through a Facilitation Centre notified by the Commissioner for submitting an application for GST refund of the tax, interest, penalty, fees paid by them. Along with the application, the applicant shall be required to submit the following documents as given below
Copy of the order can be submitted along with the refund application
As per the provisions of CGST act, 2017, GST refund application shall be filed within 2 years from the relevant date. The relevant date shall vary for each situation. Hence, the applicant has to plan their refund claim within specified time limit.
There is no time limit for claiming excess balance in electronic cash ledger as refund, provided that GST returns are duly filed.
However, we need to know that no rejection order can be passed by the officer before giving opportunity of being heard to the applicant for providing clarification or additional details as required by the officer.
Further, any person aggrieved by the rejection order passed by the adjudicating authority has the right to appeal to the appellate authority within three months from the date on which the said decision or order is communicated to such person.
Where the amount of refund claimed is more than Rs 2 lakh a certificate shall be obtained from a Chartered Accountant or a Cost Accountant stating that the incidence of tax, interest or any other amount claimed as refund has not been passed on to any other person .
This blog post has been written by Yuvarani of V Ramaratnam and Company
The minimum tax amount to be refunded in a refund application is Rs.1,000.
Yes, a taxpayer can add the details in subsequent month and can get a refund.
No. Refund claim for a tax period can be filed only after filing the details in FORM GSTR-1 and FORM GSTR-3B for the said tax period before the refund application is being filed.
Once the GST refund application has been approved and the refund order has been passed in form RFD 06, the amount shall be credited to the applicant’s bank account within 60 days from the date of the said order.
If the refund is not credited within the specified time limit, interest at the rate of 18% p.a. shall be credited along with the refund amount to the applicant's bank account from the date after the 60th day till the date of refund.
In case of excess credit or wrong credit of GST refund, the taxpayer shall remit the refunded amount to the government along with the interest at the rate of 24% p.a. from the date of refund credited till the date of remittance.
Yes. An unregistered person can claim a refund of GST paid when the contract is terminated or cancelled.
Eg., An unregistered person has entered into a contract with a registered supplier for Rs. 1,00,000. Subsequently, the contract was cancelled before execution. The supplier withheld Rs 20,000 and refunded Rs. 80,000. Now, the unregistered recipient is eligible to claim a refund on the portion of the GST which has not been remitted back by the supplier I.e., Rs. 20,000.
The procedure for claiming a refund is similar to that of the registered person. He would require to get temporary registration and apply for a refund. The officer, on being satisfied by the correctness of the application, shall pass an order for refund which will be credited to the applicant’s bank account within 60 days from the date of refund order.
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