UNDERSTANDING THE REFUND SCENARIO UNDER GST

INTRODUCTION

Provisions of refund of taxes under GST are very important as delay would adversely impact exporters, manufacturers and dealers. A delay in refund would cause problem for the exporters/manufacturer in maintaining the working capital and cash flow.

Currently there is delay in months in providing the refund to the exporters/manufacturers/dealers

Now due to the non-availability of the refund module on the common portal, it has been decided by the competent authority, on the recommendations of the Council, that the applications/documents/forms    pertaining to refund claims on account of zero-rated supplies shall be filed and processed manually till further orders.

Let’s understand the refund scenario under GST in brief:-

Brief Scenario:

Sr. No.	Types of Refund		Forms	Electronically/ Manually
1.	Refund of IGST Paid on Export of Goods		Shipping Bill + Form GSTR-3 + Form GSTR-3B	Electronically
2.	Exports of Goods / Services	without payment of tax (accumulated ITC)	Form GST RFD-01A	Electronically
3.	Exports of Services	with payment of tax	Form GST RFD-01A	Manually
	Supplies made to SEZ Unit/ SEZ Developer	with payment of tax
		without payment of tax (accumulated ITC)
	Excess balance in Electronic Cash Ledger
	ITC accumulated due to inverted tax structure [under clause (ii) of first proviso to section 54(3)]
	Recipient of deemed export

Scenario:-1

Refund of IGST Paid on Export of Goods

STEPS:

• The shipping bill filed by an exporter shall be deemed to be an application for refund in such cases
• The application shall be deemed to have been filed only when export manifest or export report is filed and the applicant has furnished a valid return in FORM GSTR-3 or FORM GSTR-3B.
• The system designated by the Customs shall process the claim for refund and an amount equal to the integrated tax paid in respect of such export shall be electronically credited to the bank account of the applicant.
• Any order regarding withholding of such refund or its further sanction respectively in PART-B of FORM GST RFD-07 or FORM GST RFD-06 shall be done manually till the refund module is operational on the common portal.

Scenario:-2

Exports of Goods / Services without payment of tax (accumulated ITC)

STEPS:

• FORM GST RFD-01A needs to be filed electronically on the common portal.
• The printout of the ARN along with application of refund shall be submitted manually before the jurisdictional GST officer. (Rule 89(1) – Application)
• The amount of credit claimed as refund would be debited in the electronic credit ledger and proof of debit needs to be generated on the common portal. ( Rule 89(3) – Debiting of electronic credit ledger)
• This form needs to be accompanied with the requisite documentary evidences, wherever applicable (Rule 89(2) – Requisite Documents)

Scenario:-3

• Exports of Services with payment of tax
• Supplies made to SEZ Unit/ SEZ Developer with payment of tax
• Supplies made to SEZ Unit/ SEZ Developer without payment of tax (accumulated ITC)
• Excess balance in Electronic Cash Ledger
• ITC accumulated due to inverted tax structure
• Recipient of deemed export

STEPS:

• Printout of FORM GST RFD- 01A needs to be filed manually before the jurisdictional GST officer
• This form needs to be accompanied with the requisite documentary evidences, wherever applicable (Rule 89(2) – Requisite Documents)

NOTE:-

* The refund application for various taxes i.e. CT / ST / UT / IT/ Cess can be filed with any one of the tax authorities

* The payment of the sanctioned refund amount in relation to CT / IT / Cess shall be made by the Central tax authority while payment of the sanctioned refund amount in relation to ST / UT would be made by the State tax/Union territory tax authority.

By: GST Cornor - November 21, 2017