GST Refund Procedure

Table of Contents

Refund under GST is the process of reversal of taxes paid by the taxpayer, for one or the other reason. You can claim a refund of the tax that you paid if you are eligible for it, by filing a refund return form under GST.

Taxpayers & Tax Practitioners struggle around this provision of the GST Regime- GST Refunds. Despite being so important it remains to be a tedious task, & requires a deep understanding of the entire concept.GST Refund claim is vital for businesses to avoid any loss of funds through taxes.

In the Following Situations, Refund can be claimed in Goods and Services Tax (GST):

  • Export of Goods or Services ( Including Deemed Export)
  • Refund of Unutilized Input Tax Credit
  • Refund from Manufacturing / Generation/ Production – tax free supplies
  • Excess payment due to mistake and inadvertence
  • Finalization of Provisional Assessment
  • Refund for Tax payment on transactions by UN bodies,CSD Canteens, Para-military forces canteens, etc
  • Refund of pre deposit in case of Appeal.

What are the Forms under GST Refund Process

In order to claim a GST refund, you must first understand the GST refund forms & know what each form signifies.

There are a total of 10 Forms under GST Refund & we have listed them down explaining each one of them-

  1. Form GST RFD 01- The main refund application is made through this form. You must furnish the required details & attach the supporting documents while filing this form. This form also needs to be verified by a CA before submission on the GST Portal.
  2. Form GST RFD 02-This form is an auto-generated acknowledgment of the GST RFD-01 form.
  3. Form GST RFD 03- This form can be called an error file. In case of any mistakes or deficiencies in Form GST RFD-01, this error file will be sent to the taxpayer, containing the errors or indicating deficiencies. The taxpayer can rectify these errors & try re-filing Form GST RFD 01.
  4. Form GST RFD 04- This form is the Provisional Refund form, mostly a provisional amount of 90% of the refund claimed is granted to the taxpayer initially within 7 days of filing the refund form.
  5. Form GST RFD 05- On successful validation of the refund application the authorized official will issue a final order through this form. The authorized official must do it within 60 days from the application date.
  6. Form GST RFD 06- This form is used to adjust the refund against the taxable amount.
  7. Form GST RFD 07- This form is a notice of rejection of a refund application.
  8. Form GST RFD 08- This is the payment advice or the Notice Form under refunds, issued by the Tax Official to the taxpayer.
  9. Form GST RFD 09- In case the refund is delayed from the tax official’s end, then this form will serve as an order for interest on late payments to be paid to the taxpayer.
  10. Form GST RFD 010- This is the main refund form for UN bodies, foreign embassies, or consulate. Any foreign bodies or embassies (as per section 55 of the CGT Act) can claim their refunds through this form.
  11. Additionally, there is Form GST RFD-11 but it is not a refund form, it is the Letter of Undertaking or LUT form that is filed in case of exports while exporting goods without the payment of IGST.

Special cases of GST Refund Claim

  1. Taxes paid under wrong GST Head– In case you have paid CGST & SGST for inter-state movement of goods you are eligible to claim a refund of the CGST & SGST after paying the taxes in the right GST Head.
  2. For Supplies not receive– If you have paid taxes on a supply that you didn’t receive & for which an invoice was not generated, then you can claim a refund of such taxes.
  3. Tax refund order– Taxes can be refundable as a consequence of a judgment, decree, order or on the direction of an Appellate Authority, Appellate Tribunal or any court.
  4. No Refund on ITC in case of exports– You cannot claim ITC on taxes paid on exports that were taxable under excise duty.
  5. Duty Drawback– If your supplier has availed the benefit of duty drawback paid under excise duty, then you cannot claim a refund of such ITC.

Circumstances when GST can be claimed back

  1. Refund of any Balance in Electronic Cash Ledger can be claimed in the return furnished under section 39 in the Form GSTR 3 GSTR 4 and GSTR 7 before the expiry of 2 years from relevant date.
  2. Refund of tax paid by a specialized agency of UNO, consulate or embassy of foreign countries – on inward supplies of goods or services or both, by making refund application within 6 months from the end of the quarter in which such supply was received.
  3. Registered person may claim refund of unutilised Input Tax Credit at the end of any tax period
  4. Export of goods or service or both on payment of IGST
  5. Tax paid on deemed export
  6. Payment of tax on provisional basis
  7. CGST and SGST/ UTGST paid on intra-state supply but held as inter-state supply.
  8. 8. Advance tax paid by a Casual Taxable Person or Non-Resident Taxable Person under Section 27(2).
  9. 9. Excess payment of taxes.

What is the procedure for Refund?

1. File for GST RFD 01 along with the required documents in Annexure 1 to the form.

2. The assessee shall receive an acknowledgement in GST RFD 02 if there are no problems with the application in GST RFD 01. In case of any issues, it will be communicated in GST RFD 03.

3. The Proper Officer may pass an order in GST RFD 04 sanctioning the amount due within 7 days from the date of the acknowledgement if the Proper Officer is prima facie satisfied.

4. The Proper Officer shall pass an order for refund in GST RFD 06 and issue a payment advice in form GST RFD 05 post which the amount automatically gets credited to the bank account of the registered person.

5. The order has to be passed within 60 days from the date of receiving a complete application.

6. In case of export supplies, the Act also provides for a provisional refund of  90% of the refund claim within 7 days of the date of the acknowledgement provided the supplier was not prosecuted in the 5 years immediately preceding the refund period.