How to collect GST Tax Refund ?

This document covers

1. GST Refund
2. When to claim GST Refund?
3. Time Limit for Claiming Refund
4. Application for Refund of tax, interest, fees or any other amount
5. Interest on delayed Refund
6. Consumer Welfare Fund

1. GST Refund

Timely refund mechanism is essential in tax administration, as it facilitates trade through the release of blocked funds for working capital, expansion and modernisation of existing business. Section 54 of the CGST act deals with refund claims under GST.

2. When to claim GST Refund?

A claim for refund may arise in the following situations.

1. Export of goods/services or both or supply of goods/services or both to an SEZ developer/unit on payment of IGST and refund of such IGST paid is claimed as refund.
2. Refund of unutilized ITC on Zero rated Supplies (Exports & Supplies to SEZ developer/unit) without payment of tax.
3. Accumulated ITC on account of inverted duty structure i.e., rate of tax paid on inputs is more than rate on tax on output supplies.
4. Taxes paid on the supplies regarded as deemed exports.
5. Refund of tax wrongly collected and paid to the government.
6. Refund of any balance in the electronic cash ledger after payment of tax, interest, penalty, fee or any other amount payable.
7. Refund on account of issuance of refund vouchers for taxes paid on advances against which goods or services have not been supplied, may be claimed.
8. Refund of taxes on purchase made by UN bodies or embassies etc.
9. The IGST paid by tourist leaving India on any supply of goods taken out of India by him

3. Time Limit for Claiming Refund

• Any person claiming refund of any tax, interest or any other amount paid can make an application before the expiry of 2 years from the 'Relevant Date'.
• A registered person may claim refund of any unutilised ITC in case of zero-rated supplies (Without Payment of Tax) or accumulated ITC on account of inverted duty structure at the end of any tax period.

4. Application for Refund of tax, interest, fees or any other amount

• The application for refund of tax, interest, late fee or any other amount paid should be filed in GST RFD-01 electronically through GST Common portal by any person, except the persons covered by notification issued under section 55.
• If a registered person wants to claim the refund of any balance in the electronic cash ledger, he may claim such refund in the return furnished for the relevant period instead of claiming the same in Form GST RFD-01.

5. Interest on delayed Refund

• Where any refund is not disbursed to the applicant within 60 days from the date of receipt of application, interest @ 6% p.a is payable to the applicant.
• Interest is payable from the date immediately after the expiry of 60 days from the date of receipt of application to the date of refund of such tax.

6. Consumer Welfare Fund

• Consumer Welfare Fund was created to promote and protect the welfare of consumer, create consumer awareness and strengthen consumer movement in the country, particularly in rural areas. Amount of refund which is not payable to the applicant is credited to the Consumer Welfare fund.
• Amount of refund is paid to the applicant in case where there is no unjust enrichment i.e. the incidence of tax has not been passed by the supplier to the recipient.