To get the refund of GST amount the registered person (taxpayer) has to follow the procedure mentioned under section 54 of the CGST Act, 2017. The detailed procedures are as follows:
Refund of Tax (GST) [Section 54]:
(1). Any person claiming a refund of GST & Interest thereon (if any) shall apply for the refund within 2 years from the RELEVANT DATE in the Form GST RFD-1.
But, No need to separately apply if the registered person is claiming the refund of the amount in E-Cash Ledger. Just claim it with your periodic return e.g. GSTR-3.
(2). All person having UIN (i.e. International Bodies eg. UN, WHO, UNICEF etc.) may apply for the refund of all taxes paid on inward supply within 6 months 18 Months (AMD.) from last day of Quarter in which inward supply received.
(3). Refund of unutilized ITC shall be given at the end of tax period (monthly/quarterly) and only in the following 2 cases:
– Zero Rated Supply made without payment of tax.
– Inverted Tax Rate Structure (ie. Higher tax rate on Input and the Lower tax rate on Output)
Note-1: No such refund shall be given if “Export Duty” is being levied on export of goods. The refund shall be given only in case of export without payment of any tax.
Note-2: Refund of ITC shall not be given if the supplier has taken Drawback of GST after export OR Refund of IGST Paid.
Amendments:- The govt. has specified certain Goods/Services on which refund unutilized ITC due to Inverted Tax Rate Structure is not allowed.
These are:- Supply of under construction house; Woven fabrics of silk/wool/cotton, knitted or crocheted fabrics; Rail locomotives powered from an external source of electricity or by electric accumulators.
On these goods/services No Refund of unutilized ITC arising from Inverted Tax Rate Structure shall be allowed. BUT IF UNUTILIZED ITC IS DUE TO ZERO RATED SUPPLY THEN THAT WOULD BE REFUNED.
(4). The application of the refund shall be accompanied by necessary documents to establish your claim of refund (e.g. Invoice, Dr. note, Cr. Note etc.). BUT; If the refund amount is less than Rs. 2,00,000 (i.e. up to Rs. 1,99,999) then no such documents required. ONLY SELF DECLARATION BY APPLICANT WOULD BE SUFFICIENT.
(5). If proper officer is satisfied with the refund claim then he shall transfer such refund amount to the Consumer Welfare Fund (CWF).
(6). In the case of Zero Rated Supply of Goods/Services, the Proper Officer shall provisionally (without any cross check etc.) allowed 90% of refund claimed. Balance 10% shall be transferred to the CWF.
(7). Proper Officer shall pass refund order within 60 days from the date of receipt of the application for refund.
(8). The refund amount shall not be transferred to the CWF but it shall be given to the applicant if the refund amount relates to the followings:
– Zero Rated Supply of Goods/Services
– Inverted Tax Rate Structure
– Refund of tax paid on canceled supply
– Refund of tax paid u/s 77 [i.e. IGST paid instead of CGST & SGST/UTGST and vice versa]
– Other class of persons as may be notified by Govt.
(9). The refund shall always be given only as per Section 54 and not under any other manner even if there is any contrary judgment, order, decree etc. of any court or tribunal etc.
(10). If the applicant has any pending liability for tax, interest, penalty etc. then the Proper Officer may:
– Hold applicant’s refund unless he pays the dues; OR
– Adjust the dues with the refund amount and then only balance (if any) refund paid.
(11). When any appeal/proceeding is pending against refund order and the Commissioner is of the opinion that the issue of refund may adversely affect the revenue then the Commissioner may Hold the refund.
(12). But, once the appeal/proceeding against refund comes in the favor of the applicant then the applicant shall also get 6% P.A. interest on such refund.
(13). No refund shall be given to the Casual Taxable Person (CTP) OR Non-Resident Taxable Person (NRTP) unless their period of temporary RC is expired and CTP/NRTP has furnished every returns etc. and fulfill every other compliance.
(14). If the refund amount is up to Rs. 999 then NO REFUND SHALL BE GIVEN UNDER POINT 5 & 6 ABOVE.
Amendment:- No refund shall be paid to an applicant, if the amount is less than Rs. 1,000. The limit of Rs. 1,000 shall apply for each tax head separately and not cumulatively. Further, the limit would not apply in cases of refund of excess balance in the electronic cash ledger.
Interest on delayed Refunds: [Section 56]
– If the refund is not given within 60 Days from the date of application then from 61st Day interest @ 6% P.A. shall also be given.
– If the refund has been allowed by an adjudicating authority/appellate authority/tribunal/courts etc. then in case of days after 60 days the rate of interest shall be @ 9% (instead of 6%).