Refund of Tax in GST

Under the Goods and Services Tax (GST) system in India, taxpayers can claim a refund of tax in certain situations where the tax paid is more than the actual tax liability. The GST refund provisions are designed to provide relief to the taxpayers in cases where they have paid tax erroneously or the tax liability is lower than the amount paid.

Eligibility for GST Refund

The GST refund provisions allow taxpayers to claim a refund of tax in the following situations:

• Exports: Taxpayers engaged in the export of goods or services are eligible for a refund of the tax paid on the inputs used in the manufacture of such goods or services. The refund can be claimed either as a percentage of the export value or as the actual tax paid on the inputs.
• Inverted Tax Structure: Taxpayers who have paid tax on inputs at a higher rate than the tax on the output are eligible for a refund of the differential amount.
• Input Tax Credit Accumulation: Taxpayers who have accumulated Input Tax Credit (ITC) due to the rate of tax on inputs being higher than the rate of tax on output supplies are eligible for a refund of the accumulated ITC.
• Refunds on Account of Finalization of Provisional Assessment: Taxpayers who have paid tax on a provisional basis are eligible for a refund of the excess tax paid after the finalization of the provisional assessment.

Procedure for GST Refund

The procedure for claiming a refund of tax in GST is as follows:

• Filing of Refund Application: The taxpayer needs to file a refund application in Form GST RFD-01 electronically on the GST portal. The application should be filed within 2 years from the relevant date, which varies depending on the nature of the refund.
• Verification of Refund Application: Once the refund application is filed, it is verified by the proper officer. The proper officer may issue a deficiency memo if there are any discrepancies in the application.
• Refund Sanction: After the verification of the refund application, the proper officer sanctions the refund if all the conditions are met. The refund amount is credited to the bank account of the taxpayer.
• Refund Rejection: If the proper officer is not satisfied with the refund application, he may reject the application and issue a show-cause notice to the taxpayer. The taxpayer is required to respond to the show-cause notice within 15 days.

Documents Required for GST Refund

The following documents are required for claiming a refund of tax in GST:

• Copy of GST RFD-01: The refund application in Form GST RFD-01 filed electronically on the GST portal.
• Invoice and Payment Proof: The taxpayer needs to submit copies of the invoice and proof of payment of tax to support the claim for refund.
• Shipping Bill/Bill of Export: For exporters, the shipping bill or bill of export is required as proof of export.
• Declaration/Certificate: In some cases, a declaration or certificate from a Chartered Accountant or Cost Accountant is required to support the claim for refund.