Preparation of Documents Required For GST Refund

With the advent of GST in July 2017, there was a buzzword that now getting GST refund from the government would be an easy process and everything will be online. However, in reality, suppliers are still facing problems in getting a GST refund. In this write-up, we will try to cover various aspects of GST refund and in which cases the same are available.

In the following situations, GST refund may be claimed:

  1. When there is excess balance available in Electronic Cash ledger.
  2. In case of export when the export is made without payment of IGST, one can claim GST refund of input tax credit on export of goods and services.
  3. When refund is claimed for Input Tax credit which is accumulated due to Inverted Tax Structure
  4. Refund on export of services with payment of tax.
  5. Refund may also arise due to supply of goods to SEZ unit/developer
  6. Refund in case of deemed exports

 

We, at EzyBiz India Consulting LLP, through our team of experts comprising of chartered accountants and finance professionals, assist in preparation of documents and following up with GST department for obtaining GST refund in time.

  • When there is excess balance available in Electronic Cash ledger

The suppliers are eligible to apply for refund of excess or unutilized balance available in electronic cash ledger whether it is due to CGST or SGST or IGST or late fee or penalty etc. Here, normally excess arises due to the fact that sometimes GST payment has been made in wrong head like CGST payment has been made in IGST or in late fees etc.In such situation, first of all cash need to be deposited under correct head and later one has to apply for GST refund.

  • In case of export when export is made without payment of IGST, one can claim refund of input tax credit on export of goods and services.

The suppliers are eligible to apply for GST refund of unutilized input tax credit on export of goods and services. However, for claiming same, following conditions need to be fulfilled:

  1. There is actual export of goods or services
  2. Exporter has furnished Letter of Undertaking for exporting goods without payment of IGST.
  3. Exporter has claimed ITC in GST returns within prescribed time and same is reflecting in electronic credit ledger.
  4. Input tax credit claimed shall be genuine
  5. All returns i.e GSTR-1 and GSTR3B for the tax period must have been filed

It may be noted that in case where exporter export capital goods under Letter of Undertaking for export without payment of IGST, then He cannot claim refund of input tax on such capital goods purchased by Him.

  • When refund is claimed for Input Tax credit which is accumulated due to Inverted Tax Structure

In some industries, tax rate on inputs is higher than tax rate on outputs and hence there is accumulated ITC for which refund arises. However, it may be noted that in such cases, GST refund arises only when such inputs are directly used for outputs. Further, in such cases, refund on input services is not available. Similarly, refund on capital goods is not available.

  • Refund on export of services with payment of tax

Sometimes, instead of applying for LUT, exporters pay tax at time of export and later on claim for its refund. This option is generally applied by exporters at time of export of services since this option is not available for export of goods. It means that service provider can provide services outside India, pay taxes on such services in India and later on apply for refund of such IGST paid.

In case any GST refund arises due to export of goods after payment of IGST instead of export against LUT, in such cases, GST department/ custom authorities will automatically refund IGST in case there is matching of data filed as per shipping bills and as shown in GST returns.

  • Refund may also arise due to supply of goods to SEZ unit/developer

When any supply is made to SEZ unit/ Developer, it is treated same as of export supplies. Accordingly, there are 2 options available to supplier. Either He may supply against LUT or He may supply after payment of taxes. In case if supplier or exporter executes a LUT, then there is no need to pay taxes on such supplies to SEZ unit/developer and can claim refund of input taxes paid on these supplies. In case if supplier/developer pays IGST at time of supply to SEZ units, then He may claim refund of IGST paid on such supplies.

  • Refund in case of deemed exports

Deemed export means the goods when supplied, does not leave India and payment for which is received either in Indian rupees or in convertible foreign exchange, if such goods are manufactured in India. For example, Supply of goods by registered person against advanced authorization, Supply of goods by registered person to EOU etc

In such cases, refunds can be applied either by supplier or by recipient. Here, only one party can claim refund. In case supplier wants to claim refund, then following conditions must be fulfilled:

Recipient must not have taken credit on supplies made to him

Recipient furnishes an undertaking that no input tax credit on such supplies has been availed of by him and

Recipient furnishes an undertaking that He will not apply for refund on such supplies and the supplier may claim the Goods and Service Tax refund on such supplies.

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    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.