Refund of unutilized Input tax credit allowed only in following cases Sec.54(3)
• Exports of goods and services. It can be tax paid on the inputs used in the goods and services which are exported at zero rate or if tax is paid on such exports ; such tax shall be refunded
• No refund of Unutilized ITC, if goods exported outside India are
subjected to export duty (proviso to 54(3)
• Zero rated supply is defined in Section 16(1) of the IGST Act.
On account of accumulation of rate of tax on inputs higher than the rate of taxes on Outputs‐ Proviso to
Credit accumulation due to output being tax exempt or nil‐rated and Credit accumulation due to inverted duty structure i.e. due to tax rate differential between output and inputs. There will be no refundof ITC of goods lying in stock at the end of the
Financial year. It is proposed to be carried forward
On Finalization of provisional assessment under Sec.60(5) A dealer can apply for Provisional assessment u/s.60 after which the officer is bound to do final assessment. If on final assessment refund is due to the assessee, it shall be paid.
• Refund of Pre‐deposit ‐ for filing appeal including refund arising in pursuance of an appellate authority’s order (when the appeal is decided in favour of the appellant.). In case of refund of Pre‐deposit, interest shall be payable from the date of deposit till the date of refund. Section 115.
Excess payment of tax due to mistake or inadvertence on account of wrong mentioning of nature of tax/GSTIN/tax amount etc.
• Tax wrongfully collected and deposited with the Central or
A taxable person who has paid IGST/CGST/SGST mistakenly as an Interstate/intrastate supply, but the nature of which was subsequently clarified, then, upon payment of CGST and SGST in the appropriate State or IGST, he shall be allowed to take refund of the tax paid under the mistaken head, subject to Rules which will be made under provisions of Sec.54. (IGST Sec.19 and Sec.77 GST).
Refund of tax payment on purchases made by Embassies or
UN bodies. Section 54(2)
• The United Nations Organization and Consulates or Embassies are required to take a Unique Identity Number and purchases made by them will be reflected against their number in GSTIN and refunds can be granted. A separate process will be notified in the Rules.
General procedures on submission of application
• Refunds under GST is application based and subject to verification. Application to be submitted through GSTN
Portal with provision for uploading supporting documents.
• Any person claiming refund of any tax or interest shall make application to the proper officer.(S.54(1)). In case of deemed exports, the application shall be filed by receiver of goods.
• The application form shall be correct and complete and will be prescribed in the Rules.S.54(7) Expln.
• The application shall be made before expiry of two years from the relevant date.
• Relevant dates for different scenarios Explanation 2 of Section 54.
Documents for claiming for refund:
In case of refund of Pre‐Deposit, reference No. of the order of Appellate Authority, copy of order and reference No. of pre‐deposit.
• Statement containing No. and date of Shipping bills or Bill of export, in case of refund on account of Exports.
• Statement containing No. & date of invoices and the relevant Bank Realization Certificate or Foreign Inward Remittance Certificate
In case of supply of goods to SEZ, No. and date of invoice and endorsement from SEZ.
• In case of supply of services to SEZ, No. and date of invoice and realisation from such SEZ unit and evidence as to authorised operations in SEZ
• No. and date of invoice and such other documents, as would be notified in case of deemed exports.
Details in Annex‐1, in case the refund is for invert rate structure. The said Annexure would require No. & date of invoice for inward supply and No. and date of invoice for outward supply
• Reference No. and copy of final assessment order in case of refund due to provisional assessment.
A declaration that incidence of Tax is not passed on to any other person, where refund amount is less than Rs. 2 lakhs
• a Certificate in Annex 2 of FORM GST RFD‐01 issued by a chartered accountant or a cost accountant to the effect that the incidence of tax, interest or any other amount claimed as refund has not been passed on to any other person, in a case where the amount of refund claimed exceeds two lakh rupees
In case of exports
– By air or sea‐when the aircraft or ship leaves India
– By land‐when goods pass the frontier
– By post‐Date of dispatch by the post office concerned
• In case of deemed exports (if refund is admissible for such deemed exports), date of return for such supplies
In case of Exports of Services, where refund of tax paid on services itself or inputs or input services
– Date of receipt of payment in convertible foreign exchange, in case services were completed prior to receipt of such payment;
– Issue of invoice, in case if payment is received in advance, prior to date of issue of invoice in case where the tax becomes refundable as a consequence of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any Court, the date of communication of such judgment, decree, order or direction.
• in the case of refund of unutilized input tax credit under sub‐section (3), the end of the financial year in which such claim for refund arises;in the case where tax is paid provisionally under this Act or the rules made thereunder, the date of adjustment of tax after the final
• in the case of a person, other than thesupplier, the date of receipt of goods or services by such person; and
• in any other case, the date of payment of tax
The verification will be mostly online
• The Import Export code (IEC) details captured at the time of issuance of GSTN can be verified with DGFT online. As proposed, if the linkage with the customs network ICEGATE is worked out, shipping bill which includes relevant details from the export invoice and packing list can be verified online. BRC‐Since the exporter has a time period of one year from the date of export for remitting of export proceeds, BRC may not be available at the time of refund application. But if export proceeds are received in advance BRC may be available. Thus, in
case of BRC refund should be subject to submission of BRC details within a period of maximum one year
or as extended by RBI. e‐BRC module of DGFT will be integrated with GST module. If export is done on payment of duty, the uploaded export invoice can be verified online for verification
of payment of duty.
• If refund is claimed on GST paid on inputs used for exported goods, utilization for exports is required to be verified. For this, the GST paid character of purchases can be matched with supplier and exporter’s return. No separate documents is necessary. As regard to utilization of inputs for export,A simple formula will be prescribed in the rules may be based on proportionate credit based on export turnover/total turnover.
• A declaration can be obtained from the exporter regarding Utilization of inputs in exported goods.
• Refund shall be granted within 90 60 days from the date of application.Sec.48(7)
• For export refunds to notified category of dealers, 80% refund can be granted before verification subject to such conditions and restrictions.
Unjust Enrichment and Consumer Welfare Fund:
Except in cases of exports, refund of untilized ITC and the amount of tax and interest or other amounts paid by the applicant, if he had not passed on the incidence of such tax and interest to any other person and tax or interest borne by such notified persons, the refundable amount shall be credited to consumer welfare fund constituted under sec.51. Interest accrues after 3 2 months from the data of application of refund.
• Interest rate yet to be notified. Business process Committee recommends 6%
• In case of refund pursuant to appellate authority/Tribunal/Court from the date of order.
Withholding of refunds:
Refund can be withheld in the following
circumstances: Section 48(10)(11)
● If the registered person has not submitted return, till he files the return.
● The proper officer can also deduct unpaid taxes if any of the person.
● Commissioner/Board can withhold refund, if, the Order of Refund is under appeal and he is of the opinion that grant of such refund will adversely affect revenue.
Minimum threshold for refund Sec.48(14)
No refund shall be granted if the amount is less that Rs.1000/‐.
Advantages of refund system in GST vis‐vis to current refund systems:
Refund scenarios limited.
• Total online process.
• Online verification to the extent possible.
• Communication and status check of refund application by the dealer online.
• Fixed time limit for refunds in the Act.
• Minimal or no blockage of Capital to dealers