GST Official Refund Procedure: All You Need to Know

GST Official Refund Procedure

There are various rules and regulations which have emerged in the GST refund process. The GST refund will be needed to maintain under the GST as even a slight delay in the refund process will impact the working capital and cash flow of the manufacturers and exporters. In the current scenario, there is a delay in refunds extending for months by making refunds available to the concerned manufacturers and exporters and to get the refunds, it is a challenge as there are strict rules and regulations for the processing of refunds.

There are Various Situations for Refund under GST like:

  • Excess amount payment of tax accumulated due to mistake or misinterpretation
  • Export (also deemed export) of goods/services within the claim of rebate or Refund of collected input credit of duty/tax when goods/services are exported
  • Finalization of provisional assessment
  • Refund of Pre-deposit for filing appeal assimilating refund coming in pursuance of an appellate authority’s order
  • Payment of duty/tax during the investigation but no/ less liability arises in the event of finalization of investigation/adjudication
  • Refund of tax paid on purchases done by Embassies or UN bodies
  • Credit collection due to output being tax exempt or nil-rated
  • Credit collection due to inverted duty structure i.e. due to tax rate differential between output and inputs
  • Year-end or volume based incentives provided by the supplier through credit notes
  • Tax Refund for Foreign Tourists

Read Also: How to File GST Refund Claims Manually? Step by Step Guide

There is an Official Refund Process under the GST:

  • An Application form to claim a refund can be filed through the GSTN portal
  • An acknowledgement number will be given to the applicant by the means of SMS or email when the application is filed electronically
  • The changes will be made to return and cash ledger and decrease the “carry-forward input tax credit” automatically
  • Refund application and relevant documents presented must be scrutinized and adhered accordingly within a period of 30 days of filing the refund application
  • The issue of “unjust enrichment” will be analyzed for reach refund application. In the case of non-qualification, the refund would be transferred to CWF (consumer welfare fund)
  • If a refund amount stated crosses the predetermined amount of refund then the file will through the pre-audit process for sanctioning the refund
  • Refund will be credited electronically to the account of an applicant via ECS, RTGS or NEFT
  • The application for refund can be made after every quarter
  • An amount less than 1000 is not eligible for the refund

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Delay in Refund and its Process

Subramanian committee suggested along with the defined GST laws and regulations, that the refund application must be entertained within the period of 90 days and must be processed in the same time period. If in any case the application could not be processed within the given time framework, there is a 6 percent of interest recommended along with the refund amount.

It was also mentioned by the Nirmala Sitharaman (finance minister) who cleared that the refund process will be done within the period of 7 days and if the process gets late for more than 2 weeks then the refund will be provided along with the interest.

It is speculated that the process of refund application will be fast and smooth due to its digital dependability. Also, the data will be uploaded electronically which depicts that the verification and the detailed analysis of the refund application will be quick.

GST Refund Frequently asked questions (FAQs)

Q. What in case if taxpayer miss shipping and invoice bill in a month, can he add the details in subsequent month and get a refund?

  • Yes, a taxpayer can add the details in subsequent month and can get the refund.

Q. Does GSTR 2 and GSTR 3 needs to be filed for claiming refunds?

  • If the taxpayers have filed GSTR 1 and GSTR 3B than he doesn’t need to fill other forms to claim refunds.

Q. Is the taxpayer eligible to claim refunds on IGST paid on exports of goods if he has filed GSTR 3B?

  • Yes, the taxpayer is eligible to get the refunds to claim if he has provided the details of export goods details in GSTR 1 Table 6A and has filed GSTR 3B with relevant tax details.

Latest Updates and News on GST Refund Topic

GST Refund in Hilly Areas Under Scanner

Taxpayers in hill area and stations are set to approach the court against revenue department which has found a reversal of transitional credit benefited by them on account of cash balance available in the ledger ahead of GST implementation in the country.

The department has not distributed the available GST refunds to producers and manufacturers of hilly states. Previously before GST implementation, under the area-based exemption scheme, the manufacturers were provided with tax concessions.

The department now mentions that the transitioning provision available under newly implemented indirect tax regime was referred only to the excess credit available with the taxpayers, and it did not apply to the ledger for cash balance.

Furtherly, finance secretary also mentioned that the Cash credit can not undergo into GST as only Input Tax Credit can be accountable for transition under GST regime.

GSTN Intends to Launch Online Application for Refunds

The GSTN organization also under inclusion to launch an online application to process refunds. Chief Executive Officer Prakash Kumar stated that “A separate online app for claiming Integrated GST refunds for August and September would be made available on GSTN portal.” The application will be giving facilities like save and upload sales data of the GSTR 1.

The automated process will be also there to assist in which the data will be extracted and will be to the customs department after digital signature. The details will be validated by the department and further refund process will be initiated accordingly.