GST Refund

The most common refund as per GST rules are as follows:

  • Tax paid on inward supply of goods and/or services which have been exported or Tax paid on inputs or input services used in goods and/or services exported (If goods are subject to EXPORT DUTY – there will be no  refund).
  • In case of Unutilized input tax credit due to output supplies being exports or zero rated supplies.
  • When rate of tax on output is lesser than the rate of tax on input supplies, there will be an unutilized input tax credit (No refund – when supplies are NIL rated or fully exempt).

Refund Process for GST

Application for Refund:

For refund before the expiry of 2 years from the relevant dates an application must be filed in Form GST RFD-1 as mentioned below

Cases Relevant dates
Goods exported by sea or air Date on which the ship or aircraft in which the goods are loaded, leaves India
Goods exported by land Date on which the goods pass the frontier
Goods exported by post Date of dispatch of goods by the concerned post office.
Services exported, where the supply of service has been completed prior to the receipt of payment Date of receipt of payment
Services exported, where the payment has been received in advance, prior to the date of issue of invoice Date of issue of invoice
Unutilized input tax credit End of the financial year in which the claim for tax refund arises
Goods regarded as deemed exports Date on which the return relating to the deemed exports is filed
Tax refundable as a consequence of a judgement, decree, order or on the direction of an Appellate Authority, Appellate Tribunal or any court Date of communication of the judgement, decree, order or direction
Tax provisionally paid Date of adjustment of tax after the final assessment
In the case of a person, other than the supplier – Date of receipt of goods or services by the person
Any other case Date of payment of tax

Note: A claim for refund of the balance in the electronic cash ledger must be made through the relevant monthly return, i.e. Form GSTR-3 in case of a regular dealer, and Form GSTR-4 in case of a composition dealer.

Required Documents:

  • The person needs to file a declaration, based on the documents or other evidence available with him, certifying that the incidence of tax or interest being claimed as refund has not been passed on to another person,If the amount claimed as tax refund is less than Rs. 5 Lakhs
  • If the amount claimed as refund is above Rs. 5 Lakhs – The application for refund must be accompanied by:
  • Documentary evidence to establish that the refund is due to the person.
  • Documentary or other evidence to establish that the amount was paid by him/her, and that the incidence of the tax or interest has not been passed on to another person.

Order for Refund:

The authorized officer will refund 90% of the total amount claimed as refund on a provisional basis in Form GST RFD-4, If the refund is on account of export of goods and/or services. Thereafter, due verification of the documents furnished, the officer will issue an order for final settlement of the refund claim.

The Provisional refund will be granted only if the following conditions are Satisfied:

  • The person claiming refund has not been prosecuted for tax evasion of an amount exceeding Rs. 250 Lakhs during the preceding 5 years.
  • The person’s GST compliance rating is not less than 5 on a scale of 10.
  • No pending appeal, review or revision exists on the amount of refund.

The officer will issue an order for the refund in Form GST RFD-5 only If he is satisfied that the whole or part of the amount claimed as refund in the application is refundable, . This will be done within 60 days from the date of receipt of application. If the refund is not sanctioned within 60 days, interest on the refund amount will be paid for the period after 60 days, till the date of actual refund of tax.

Note: No refund shall be made if the amount claimed as refund is less than Rs. 1,000.

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