When the tax authorities have to pay due tax amount to the taxpayers it is called as GST refund. The taxation authorities have to provide these to the taxpayers who have registration under GST, in cases when they have made excess payments of tax or for some other reasons. Only in special mentioned cases, a taxpayer is liable to claim GST Refund. Getting GST Refunds or Input Tax Credits on time is really very important for the taxpayer or the business organization to maintain continuous cash flow.
Process of Claiming a GST Refund
GST refunds can be claimed by the taxpayer while filing the tax returns at regular intervals. A procedure laid down under the GST Rules must be followed by taxpayer who wants to claim interest or refunds or input tax credits. The GST Refund process of claiming is as follows:
- The taxpayer in order to claim refund has to make an application through Form GST RFD-01 on GSTN portal.
- Once the applicant submits the duly filled application, on acknowledgement, a unique number is generated in the Form GST RFD-02.
- The application is duly checked by the concerned officer. He / She will communicate any loopholes or deficiencies in the application through Form GST RFD-03. Also, a provisional refund is granted to the claimant by the officer.
- The concerned officer scrutinizes and verifies the application and the documents submitted by the claimant and ensure their validity. Once the verification process is done successfully, the officer passes an order in Form GST RFD-04, where he/ she orders a provisional refund of tax requested by the claimant in the GST Refund application. This is done within seven days from the date of acknowledgement.
- The officer issues a payment advice in Form GST RFD-05. Once the application process is completed, the refund amount is deposited in the bank account provided by the claimant in the application.
- Any adjustment to the electronic cash and credit ledgers of the claimant and to return and reduce the Input Tax Credit liability is made by the taxation department.
- The authorities examine the claim amount and check whether they are just or unjust. If the claim made in the application is unjust the application is not passed. And the tax refund amount is deposited in the consumer welfare fund ran by the government.
- In cases where the claimant has been asking for a refund amount higher than the already determined refund then he’s directly becomes eligible for a pre-audit process that is to be held by the taxation authority. This audit is conducted to determine the actual amount of refund that the applicant is liable to.
Documents required during GST Refund
The documents required during GST Refund process depends on various cases of refund. The required documents are
- Copy of tax invoices
- Copy of invoices of any transactions done by the supplier
- An endorsement from an authorized officer for proving that the receipt of goods and services were provided to the Special Economic Zone (SEZ)
- A declaration regarding that ITC has not been availed by the SEZ unit on the taxes paid by the service provider or supplier
- A certificate from Chartered Accountant if the refund claim amount exceeds Rs. 2,00,000
- Reference number of the order, in case the refund is claimed based on the order from an appellate court
- Statements containing details of all the invoices that have been prescribed by the GST provisions
- Export invoices
- Relevant Bank Realization Certificate
- Statement containing the details of date and number of all the bills related to the exports
Frequently Asked Questions
Under what cases, GST Refund is not available?
The GST Refund on unutilized Input Tax Credit on account of following is not available:
- On the goods exported outside India, liable to export duty and
- Where the supplier of goods or services or both avails of drawback (Central tax or IGST) paid on such supplies.
What are various forms prescribed for GST Refund?
Following forms have been prescribed for GST refund:
- GST-RFD 1 – Application for refund
- GST-RFD 2 – Acknowledgement
- GST-RFD 3 – Communication of deficiency in refund application by proper officer
- GST-RFD 4 – Order of sanctioning of refund on provisional basis
- GST-RFD 5 – Payment advice to credit amount to bank account of applicant
- GST-RFD 6 – Order sanctioning refund on final basis
- GST-RFD 7 – Order giving details of adjustment against outstanding demand.
- GST-RFD 8 – Notice to show case if refund is not admissible
- GST-RFD 9 – Reply of notice by applicant
- GST-RFD 10 – Quarterly application of refund in case of specialized agency
How Refund amount is calculated?
Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) x Net ITC / Adjusted Total Turnover
- Refund amount means the maximum refund that is admissible
- Net ITC means input tax credit availed on inputs and input services during the relevant period