Situation for GST Refund Claims

GST Refund Claim process is one of the main procedures under GST of keen importance to the taxpayer. GST refund means making application for receiving funds that the taxpayer has paid as excessive tax amount to the authorities. The liability to provide the refunds is totally on the GST department. Making a refund application under GST is also important for fueling in the continuous cash flow in the business of the taxpayer and help in case of financial crunch.

GST Refund Claims

The GST law requires that all the GST Refund claims must be filed within 2 years from the relevant date as prescribed in the CGST Act, 2017. In a recent judgment the appellate court has ordered that GST Refund can now be claimed for 2 financial years. Here are some common grounds discussed in detail, on which a GST Refund Claim can be made by the taxpayer.

Zero Rated Supplies:

It is one of the major categories or ground under which a taxpayer can make GST Refund Claims on account of exports of goods or services or both. Any exported supply of goods and services to the SEZ unit or SEZ Developer has been categorized as Zero-rated supply. As per the Integrated Goods and Services Tax (IGST) Act, 2017, Section 16 defines “Zero-rated Supply as any one of the following supply of goods or services or both-

  • Export of goods or services or both.
  • Supply of goods or services or both to a Special Economic Zone (SEZ) Unit or SEZ developer.

GST Refund Claims on Payment of Wrong Tax:

There can be situation when the taxable person may pay central tax plus state taxes instead of the integrated taxes and vice-versa situation can happen as well due to incorrect applicability of the provisions related to the place of supply. In such cases, the taxpayer will not be charged with any interest while making the appropriate tax payments. Also, the applicant can make GST Refund Claims on the taxes paid wrongly, previously.

GST Refund Claim by a Person who has borne the Incidence of Tax:

In case the taxable person has paid taxes more than the actual due amount on supplies, is to be credited in the account of the Government of India. In accordance with the Section 54 of the CGST Act, 2017, the taxable person can file for a refund claim for the incidence of tax borne by him.

Refunds claims for Casual or Non-Resident Taxable Persons:

Casual or Non-Resident taxable persons are liable to pay advance taxes at the time of registration. Sometimes this advance amount of taxes could be more than the actual tax liability on the supplies that they must have. In that case an application to avail GST Refund Service can be made by such persons to the department. The refund is only granted when the taxable person has filed his/her tax return and has proved the tax liability they are liable for.

Refund to UN Bodies and Other Notified Agencies:

As per the Central Goods and Services Tax (CGST) Act, 2017 and international obligations, the Unite Nation (UN) bodies and embassies as notified in the act have been exempted from paying any GST. But such exemptions have been in operation through the GST Refund Claim mechanism in the country. Therefore, a taxable person who has made supplies to such bodies or organizations would be charged with due taxes and the amount will be remitted to the Government account. As per the Section 55 of the CGST Act, 2017 the embassies and UN bodies can make a refund claim on such purchased items from the department within six months from the last date of the quarter in which the supply was provided.  

GST Refund to International Tourists:

In Section 15 of the IGST Act, 2017 an enabling mechanism has been introduced, as per which the international tourist procuring any goods in India, can seek for a refund of the paid IGST by them. Such GST Refund Claims must be made by the tourist before leaving the country.

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