GST Refund Process

5paisa Research Team Date: 02 May, 2023 06:09 PM IST


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When the concept of GST initially got introduced, it brought into place different systems & mechanisms for refunds. Multiple refund claims were filed by taxpayers. Upon this, a standardised form was introduced. With that, it became a requirement for every taxpayer to perform the prerequisite steps associated with the GST refund process.
Simply put, the GST return process is where registered taxpayers claim an excess amount paid more than their GST liability. Claimants can submit the refund application with the quintessential details in the official GST portal. Here's a brief introduction to what exactly is the GST refund:

What is the GST Refund?

A taxpayer should follow elaborate steps while applying for the GST refund process. They must submit documents & declarations to GST authorities and claim the refund. Note that the refunds under GST might be the balance in cash in the e-cash ledger that gets deposited in excess.
It may happen due to the mistakenly paid tax. Besides, it results from the ITC or accumulated Input Tax Credit that was unable to get utilised for tax payments because of an inverted tax structure or zero-rated sales.

How to Claim GST Refund?

Want to claim a GST refund? You need to submit a refund pre-application form. It's the form where taxpayers need to fill in the important information about the following:

●    The type of business
●    Aadhaar number
●    Income tax details
●    Export data
●    Expenditure
●    Investment

Taxpayers need to file the pre-application form for all forms of GST refund. This form does not require to get signed. Note that it cannot be edited too once it is submitted. So, the applicant needs to be meticulous while filling up the form.

Here are the key steps involved in the GST refund procedure. Please ensure you pay extra attention to their work accordingly:

Step 1: Visit the GST portal and go to the tab that mentions 'Services.' Tap on the 'Refunds' option and choose the option that mentions: 'Refund pre-application form.'
Step 2: On the page displaying this: 'Refund pre-application form', please fill in all details before clicking on 'Submit'. The submission confirmation will get displayed on your screen.

Please keep the following things in mind before you apply for the refund process under GST:

●    Your business's nature (Manufacturer, trader, service provider, or merchant exporter)
●    Date of issue of IEC
●    The primary authorised signatory's Aadhaar number is compulsory
●    Income tax paid in the recent financial year
●    Advance tax paid in the recent financial year
●    Value of exports made in the recent financial year
●    Capital expenditure & investment made in the recent financial year

Order for GST Refund Claims

What if the refund is on the export account of the GST? In that circumstance, the authorised office refund around 90% of the amount claimed as the refund in Form GST RFD-4. So, after due verification of the documents furnished, an office issues the order for the refund claim's final settlement. Note that a provisional refund gets granted subject to a few conditions as mentioned in the following:

●    The individual who claims the refund hasn't been prosecuted for the tax evasion of an amount that exceeds Rs. 250 Lakhs during the preceding five years
●    The individual's GST compliance rating isn't less than five on a scale of 10.
●    There are no pending appeal, revision, or review existing on the refund amount

If an officer is convinced that the entire amount claimed as the refund is refundable, he issues the order in Form GST RFD-5. That gets performed within 60 days from the application receipt's date.
And if the refund is not sanctioned within sixty days, the interest on the amount gets paid for a period after the 60-day timespan until the date of the actual refund of tax.

One quick note: There will be no refund if the refund claim is less than Rs. 1000.

Situations that can lead to Refund Claims

Did you know that a proper refund mechanism is compulsory for effective tax administration? That's because the trade gets facilitated through the blocked finances' release for the expansion, modernisation, as well as working capital needs of any business. The scenarios may contribute to refund claims, including these:

●    Deemed exports
●    Exports of services or commodities
●    Refund of taxes if embassies opt for a purchase
●    Supplies to developers as well as units in the special economic zones
●    Refund of any accrued input tax credit on the inverted duty structure's account
●    Pre-deposit refund
●    Refund arising from any judgment, order, decree, or direction of an Appellate Tribunal, Appellate Authority or court of law
●    Refund of taxes if embassies make the purchase
●    Excess payment due to errors
●    Refund because of the refund vouchers' issuance for taxes paid on advances (note that services or commodities aren't supplied on these)
●    Refunds to overseas travellers of commodities within any country carried to any international region after departing India
●    Refund of CGST and SGST paid by considering the overall supply in the course of inter-state trade or commerce

Exceptional Circumstances of GST Refund Claims

Given below are the GST refund rules for the exceptional GST refund you need to understand:

●    Tax on the supply of goods is deemed exports. The best examples of these taxes are the supply of goods or services to the SEZ or EOU ((or Special Economic Zone or Export Oriented Unit respectively)
●    Tax can be refundable due to a judgement, order, decree, or on directions of the Appellate Authority, Appellate Tribunal or the court
●    Tax can be paid on the supply which hasn't been provided, partially or wholly. For this, the invoice does not need to be issued.
●    When the individual has paid SGST or CGST on the interstate supply or the IGST, they have the GST return eligibility criteria for the refund of any amount once the tax gets remitted appropriately.
●    IGST can be paid on the goods' supply to the tourists visiting outside India (when the goods are exported to a different country)
●    Considering the 'relevant date' in such a scenario, note down the following things:
●    Goods as deemed exports (the date of return relating to deemed exports get filed
●    Tax refundable because of any decree, judgement, order or on a direction of the Appellate Authority, Appellate Tribunal or any court (date of communication of a judgement, order, direction, or decree)
●    Tax paid provisionally – The date of the adjustment of tax upon the assessment
●    For the person or other supplier, the receipt of services or goods' date by that person
●    Considering the other cases: the date of the tax payment
●    Other than these, the overall refund procedure under the GST stays the same for regular & exceptional circumstances

Refund Process under GST

Claimants who wish to make a claim need to file elaborate documents besides the refund claim. The documents prescribed are standard. In general, applicants need to submit relevant invoices related to the claim. So, what happens when a refund is made on the export of service's account that doesn't include the invoices statement? In that circumstance, the relevant bank realisation certificates will verify the receipt of payment in overseas currency.
When the claim is made by SEZ unit's supplier, an authorised office makes the endorsement verifying the receipt of these services or commodities in SEZ. They submit the same alongside the other documents. In addition, the SEZ unit needs to offer a declaration that states the ITC of tax paid by a supplier hasn't been availed.

So, when you intend to refund the claim, please adhere to the following GST refund procedure:

●    First things first, please visit the official GSTN portal & fill in your application form
●    You get an SMS or email that contains the acknowledgement number after the application's filing gets performed electronically
●    The cash & return ledger will get adjusted & the "carry-forward input tax credit" will get reduced.
●    Application for the refund alongside documents gets scrutinised by authorities within 30 days after you file the application
●    "Unjust enrichment" is a concept that gets thoroughly scrutinised by authorities. If the application doesn't qualify, refunds get transferred to the CWF or Consumer Welfare Fund
●    Wh the refund is claimed by someone in excess of its predetermined amount, the pre-audit process gets conducted before a refund gets sanctioned
●    The refund's credit will be performed electronically to an applicant's account via NEFT, ECS or RTGS
●    Individuals can make applications for their refund at each quarter's end
●    If the amount is less than Rs.1000, no refund gets provided to that individual


So, you have read what exactly the GST refund proves and the necessary documents required. This post also gave you an insight into the situations that result in refund claims, orders for GST refund claims and more. Now that you have learned the GST return process, it is time to apply for the GST return at your earliest.

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Frequently Asked Questions

Any taxpayer who has paid an additional interest, penalty, tax, fees, or other forms is applicable for the GST refund. For the refund process under gst, any taxpayer must apply via FORM GST RFD-01.

Want to apply for a GST refund? Now is the right time to perform the following steps. You can apply for a GST refund by following these steps:

Step 1: You first need to log into the GST portal. Visit the option that mentions Services. Then, tap on the option that states: Refunds. Choose the Refund pre-application form and proceed accordingly.
Step 2: The next step involves you filling in the details on the page displayed as the Refund pre-application form. Lastly, you need to click on the Submit option.

When the amount is less than five lakhs, the individual requires filing a declaration on the basis of documents or other evidence available to them. These documents must certify that the tax's incidence or interest is claimed as a refund and has not been passed onto another individual.

When the amount is more than five lakhs, the application for the refund should get accompanied by the following:

●    Documentary evidence that establishes the refund is due to that person
●    Documentary evidence or other indication establishes that the amount they paid and the tax's incidence or interest hasn't been passed to another individual

Yes, you can track the status of your GST refund application. All you need to do is to follow the below-offered steps:

●    First, you need to log into the official GST Portal
●    After this, you must navigate to the option that mentions: Services
●    Next, it is time to Track Application Status
●    After that, choose the option mentioning refund
●    Enter the ARN or Filing Year
●    Tap on the SEARCH option to track the refund application upon logging into the official GST Portal

Now, you may track the refund application upon logging into the portal via ARN or the refund application's filing year.

If you have received the intimation from the Income Tax Department or Refund Banker your processing of refund has failed, there are a few things you can do. You may submit the Refund Reissue Request on the official e-Filing portal. Taxpayers may easily raise requests in the e-Filing portal for the refund's re-issuance.