This will not only improve the refunds process, but will also enhance the overall efficiency of the backend IT systems backing the GST. It will also help in increasing the average number of refunds processed under GST.
There are various situations in which individuals or entities can claim refunds. These are:
- Excess tax payment due to inadvertence or mistake
- Export of services/goods under rebate or refund claim of the accumulated tax credit when these services/goods are exported
- Provisional Assessment finalization
- Pre-deposit refund for filing of appeal. This includes refund from pursuing an authority’s order
- Tax/duty payment done during an investigation, but less or no liability arises during finalization of the investigation/adjudication
- Tax refunds on purchase made by UN establishments, CSD Canteen supplies, PFCs (Paramilitary Force Canteens) etc.
- Tax credit refund on inputs for generation, manufacturing or production
- Tax credit accumulated when output tax is exempted
- Refund of taxes for the International Tourists
- Carry forward refund of Input tax-credit
Detailed Refund Procedure under GST
The form for refund process is available online, which needs to be duly filled and submitted. The time limit for filing the refund application is one year from relevant date. It should be filled with supporting documents such as return copy with evidences of payment, invoice copy, CA certificated for any unjust enrichment as well as any other prescribed document.
- The application for filing refund can be done either via GSTN portal or via the Tax Portal of the respective state or Centre.
- Once the application is filed electronically, an acknowledgement number will be received as a confirmation receipt. This will be either received via email or SMS and should be kept by the applicant for further references.
- This will automatically reduce the ‘carry-forward input tax credit’ across the return & cash ledger
- The application form and documents submitted will be scrutinized within 30 working days of the application filing process. If the applicant does not receive any confirmation after 30 days, he/she can communicate the same to the tax portal
- Each refund application form will be examined against ‘unjust enrichment’. If the application for refund does not qualify this principle test, the amount claimed for refund will be credited to CWF (Consumer Welfare Fund).
- An amount lower than INR 500 will not be accepted for tax refund.
- Sanctioning of the refund will only be made to the applicant via ECS, RTGS or NEFT, electronically
- Verification and control process will be applied for refund amounts that have exceeded the pre-determined amount. The application will go through a pre-audit process for sanctioning the refund.
- The refund has to be paid within ninety days from application submission.
- The ROI (rate of interest) charged will be around 6 percent. In payment default cases, the ROI will be around 18 percent.
- With respect to unpaid tax demands, GST law may provision adjustment of the refund claims.