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GST Refund

      • What is the GST refund?

       

      As per section 54 of the CGST/SGST Act, a “refund” includes:

      • i. Any balance amount in the electronic cash ledger so claimed in the returns.
      • ii.Tax paid by specialized agencies of the United Nations or any multilateral financial institution and organization notified under the United Nations (Privileges and Immunities) Act, 1947, consulate or embassy of foreign countries on any inward supply; and,
      • iii. Any unutilized input tax credit (ITC) in respect of: Zero-rated supplies made without payment of tax, and an accumulation of credit due to a higher rate of tax on inputs than on the output supplies (other than nil rated or fully exempt supplies).

         

      • Can an unutilized ITC be given as a refund when goods exported outside India are subjected to export duty?

      •  

        A refund of an unutilized input tax credit is not granted in cases where the goods exported out of India are subject to export duty –as per the second proviso to section 54 (3) of the CGST/SGST Act.

         

      • Will an unutilized ITC be refunded at the close of the fiscal year?

      •  

        There is no such provision in the GST law that would allow a refund of unutilized ITC at the conclusion of the fiscal year. It shall be carried forward to the next financial year.

         

      • What is the time limit for claiming a refund?

      •  

        A person claiming a refund is required to file an application within two years from the “relevant date” as given in the explanation to section 54 of the CGST/SGST Act.

         

      • Is there any time limit for sanctioning of refund?

      •  

        Yes, the refund must be approved within 60 days from the date of receipt of a complete application. If a refund is not approved within the stated period of 60 days, interest at the rate notified must be paid in conformity with section 56 of the CGST/SGST Act.

         

      • Is there any minimum threshold for a refund?

      •  

        No refund shall be granted if the amount is less than Rs.1000.

         

      • Is there any set format for filing refund claim?

      •  

        Every claim of refund has to be filed in Form GST RFD 1. However, a claim for a refund of the balance in the electronic cash ledger can be made by furnishing monthly/quarterly returns in Form GSTR 3, GSTR 4 or GSTR 7 of the relevant period.

         

      • Can refunds be withheld by the department?

      •  

        Yes, a refund can be withheld in the following circumstances:

        i). if the person has failed to furnish any return until he files such return.
        ii). if a registered, taxable person owes any tax, interest, or penalty that has not been stayed by an appellate authority/tribunal/ court, until he pays such tax, interest or penalty; the proper officer can also deduct unpaid taxes, interest, penalty, late fee, if any, from the refundable amount [Section 54(10) (d) of the CGST/SGST Act].
        iii). If the order of refund is under appeal and a commissioner believes that the grant of such a refund will adversely affect revenue in the said appeal on account of malfeasance or fraud [Sec. 54 (11) of the CGST/SGST Act].