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Refunds under GST

A person can make an application for refund of GST before expiry of two years from the relevant date in such form and manner as may be prescribed. Such refund may be claimed in the return filed in regular manner by the taxable person if refund is related to credit balance in electronic cash ledger. No refund shall be paid to an applicant if the amount of refund is less than Rs. 1,000.

Refund allowed in case of

  1. Zero rated supplies made without payment of tax
  2. Where refund is generated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies).
  3. Tax paid on a supply which is not provided, either wholly or partially, and for which invoice has not been issued, or where a refund voucher has been issued.
  4. The tax and interest, if any, or any other amount paid by the applicant, if he had not passed on the incidence of such tax and interest to any other person.
  5. Other conditions which the Government notifies.

Refund not allowed in case of 

  1. In case of goods or services which are notified by council in this behalf.
  2. Refund of unutilized input tax credit in where the goods exported out of India are subjected to export duty.
  3. Refund of unutilized input tax credit if the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid on such supplies.

Application Procedure

The application is to be submitted along with the documents of

  • Documents to establish that a refund is due
  • Documents to establish that the amount of tax and interest was collected from or paid by applicant and incidence of tax and interest had not been passed to any other person.
    Where the amount claimed as refund is less than Rs. 2 lakhs, the applicant may file a declaration rather than the documentary or other evidence certifying that the incidence of such tax and interest had not been passed on to any other person.
  • A Certificate in Annexure 2 of FORM GST RFD-01 issued by a chartered accountant or a cost accountant certifying that 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.

Such declaration or certificate is not required when the amount of refund is related to

(a) refund of tax paid on zero-rated supplies of goods or services or both or on inputs or input services used in making such zero-rated supplies.
(b) refund of unutilised input tax credit under sub-section (3).
(c) refund of tax paid on a supply which is not provided, either wholly or partially, and for which invoice has not been issued, or where a refund voucher has been issued.
(d) refund of tax in pursuance of section 77.

Interest on Delayed Refund

If the refund is not paid within sixty days from the receipt of application then interest is payable to the applicant at the rate of 6% or lower (Rate yet not decided) from the date immediately after the expiry of sixty days from the date of receipt of application till the date of refund of such tax.

Where refund arises  from an order passed by an adjudicating authority or Appellate Authority or Appellate Tribunal or court and which is not refunded within sixty days from the date of receipt of application filed consequent to such order, interest at rate of 9% or lower (Rate not notified yet) is payable.

Withholding of Refund

Refund can be withhold by the officer if the applicant is defaulted in furnishing any return or who is required to pay any tax, interest or penalty, which has not been stayed by any court, Tribunal or Appellate Authority by the specified date. On clearing of such default the officer has to issue the refund.
Specified means the last date for filing an appeal under this Act.

Advance Tax paid by a casual taxable person or non resident taxable person shall not be refunded until such person files all the returns for entire period for which he is granted registration.

Forms for Refund

S no.Form NumberPurpose
1GST RFD-01Refund Application form
–Annexure 1 Details of Goods
–Annexure 2 Certificate by CA
2GST RFD-02Acknowledgement
3GST RFD-03Notice of Deficiency on Application for Refund
4GST RFD-04Provisional Refund Sanction Order
5GST RFD-05Payment Advice to bank
6GST RFD-06Provisional Refund Sanction Order under section 54(5)
7GST RFD-07Refund adjusted against outstanding demand
8GST RFD-08Show cause notice for reject of refund application
9GST RFD-09Reply for form GST RFD-08
10GST RFD-10Refund Application under Section 55

Prateek Agarwal

Prateek Agarwal is a Practicing Chartered Accountant from Jaipur and been in practice for more than 7 years. He writes mainly about GST and Finance.

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