FAQs on GST Refund: Part-I

Question 1: What are Refund of GST Refund?

Answer: Refund of GST are the payments of the excessive taxes paid by the taxpayer by default or     mistake. The GST Council and the taxation department is liable to pay the excessively collected taxes. However, the new Goods and Services Tax rules and laws prescribes a proper refund process that the taxpayer has to follow in order to get the tax refunds. Such a refund can only be applied by a person who has a GST Registration.

Question 2: What are the related provisions for Refund of GST?

Answer: Section 54 of the Central Goods and Services Tax (CGST) Act, 2017 lays down the provision of GST Refund primarily with respect to the zero-rated supply, i.e., exports and supplies made to the SEZ. The following are the types of refund under GST-

  • Taxes paid on the supply of goods that are regarded as deemed export.
  • Refund of GST as prescribed under Section 77. It states, the taxes paid under the wrong or incorrect head i.e., Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST) or Integrated Goods and Services Tax (IGST).
  • Taxes paid on the supplies that have not been provided and a voucher of refund has not been issued for the same.
  • Taxes paid under the inverted duty structure. Here Refund of GST are initiated when the rate of taxes paid on input is higher than the taxes paid on output.
  • Others types of Refund of GST like in cases of tax paid by the international tourists, etc.

Question 3: What are the methods of availing Refund of GST?

Answer: To avail GST Refunds Service under the GST laws there are two methods have been prescribed. These are as followed-

  • Refund of Integrated Goods and Services Tax (IGST) by making the payment of the same. As per this GST Refund method the taxpayer can utilize Input Tax Credit, Capital goods and input services. The balance that is differentiated due to added value has to be paid in cash.
  • Refund of the Input Tax Credit on the inputs and input services. Here the taxpayer has to submit a letter of undertaking, beforehand in order to take permission for exporting the goods or services or both without paying any imposed taxes.

Question 4: What type of Refund of GST will be provided to the taxpayer under the GST Laws?

Answer: As per the new notifications provided by the government the following types of Refund of GST can be filed in the prescribed Form GST RFD 01. This is to be done on the common Goods and Services Tax (GST) Portal and the whole process is initiated electronically. The types of refunds are-

  • Refund of GST for taxes paid on the export of services.
  • Refund of the excessive tax payment.
  • Refund of GST of the Input Tax Credit (ITC) that have been unutilised on account of exports without paying the liable taxes.
  • Refund of tax paid on supplies made to SEZ Unit/ SEZ Developer along with making payments of the liable taxes.
  • Refund of unutilised ITC on account of the supplies that were made to SEZ Unit or the SEZ Developer without making any payment of the taxes.
  • Refund on initiated on the basis of provisional assessment or appeal or any other order provided by the court.
  • Refund of the unutilised ITC on the accumulation due to the structure under the inverted tax.
  • Refund of GST on taxes paid by the recipient on supplies of the deemed export.
  • Refund of taxes paid by the supplier on supplies of the deemed export.
  • Refund of GST of excess funds and balance left in the electronic cash ledger.
  • Refund of taxes paid on Intra-State supply that were actually inter-state supply and vice versa.
  • Refund of GST on any other ground or reason as may be prescribed by the statutes.
Author: Anil Agrawal
EZYBIZ India Consulting LLP, New Delhi. The firm is business and tax consultancy firm providing consultancy in Taxation, Regulatory, Transfer pricing, Valuation, Corporate funding and Business set up matters. He may be reached at 9899217778 or anil@ezybizindia.in.