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Refund Under GST

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. 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
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.
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.
Interest on delayed Refunds
  1. 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.
  2. 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.
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.

Refund Under GST FAQs

1.What are deemed exports?

Deemed exports means such supplies of goods as may be notified. The government may notify such supplies of goods as deemed exports where goods supplied do not leave India and payment for such supplies is either received in Indian Rupee or convertible foreign exchange if such goods are manufactured in India.

2.What is the procedure of refund in case of Casual Taxable persons(CTP) / Non-Resident Taxable Persons(NRTP)?
  1. The amount of advance tax deposited by the CTP/NRTP shall be refund only if the person has filed all the returns in respect of that period.
  2. The refund can be claimed by the CTP/NRTP in the last return required to be filed by him
3.What is the minimum refund claim ?

No refund shall be paid to the applicant if it is less than Rs 1000.

4.What is the rate of interest on amount refundable consequent to order passed in an appeal or further proceedings?

If any refund arises from an order passed by an Adjudicating Authority or Appellate Authority or Appellate Tribunal or Court which has attained finality and the same is not refunded within 60 days from the date of receipt of application filed consequent to such order, interest shall be payable @ 9% p.a on such refund.

5.What are the amounts credited to consumer welfare fund?

The following amounts should be credited to the consumer welfare fund.

  1. Amount of refund determined by an order passed under u/s 54(5)
  2. Any income from investment of the amount credited to the Fund
  3. Such other monies received by it, in such manner as may be prescribed
6.What is the time limit for application of refund in case of deemed exports where a refund of tax paid is available in respect of goods?

The refund application should be filed within 2 years from the date on which return relating to such deemed exports is furnished

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