FAQ’s on Refunds
Q 1. Is the term ‘refund’ defined in the Revised Model GST Law?
Ans. Yes, the word refund is defined inclusively in the Explanation to Section 48 of the CGST/SGST Act. As per the said definition, refund includes:
(i) Refund of tax on goods and/or services exported out of India; or
(ii) Refund of tax on inputs or input services used in the goods and/or services which are exported out of India; or
(iii) Refund of tax on the supply of goods regarded as deemed exports; or
(iv) Refund of unutilized input tax credit as provided under Section 48(3)
In terms of Section 48(3) of the Revised Model GST Law subject to the provisions of section 48(10) thereof, a taxable person may claim refund of any unutilized input tax credit at the end of any tax period. Refund of unutilized input tax credit is allowed in case of exports including zero rated supplies or in cases where the credit has accumulated on account of rate of tax on inputs
being higher than the rate of tax on output supplies. But, refund of unutilized input tax credit shall not be allowed when goods are subjected to export duty. Even, refund of input tax credit shall not be allowed if the supplier of goods or services claims refund of output tax paid under the IGST Act.
Q 2. Is there any time limit to claim refund under Section 48?
Ans. Yes, as per Section 48, refund application is to be filed before the expiry of two years from the relevant date.
Q 3. What is the relevant date for calculating the two years’ time limit?
Ans. The relevant date is different for different situations and the same is provided as under:
| Situation | Relevant date | |
|---|---|---|
| Refund is in respect of goods exported (or on inputs/ input services used in such goods) | ||
| i. By sea | Date on which the ship or the aircraft in which such goods are loaded, leaves India | |
| ii. By Air | ||
| iii. By land | Date on which such goods pass the frontier | |
| iv. By post | Date of dispatch of goods by the concerned Post Office to a place outside India | |
| Refund in respect of deemed exports | Date on which the return relating to such deemed exports is filed. | |
| Refund is in respect of services exported (or on inputs/ input services used in such services) | Where supply of service completed prior to receipt of payment | Date of receipt of payment in convertible foreign exchange |
| Where payment for service received in advance | Date of issue of Invoice | |
| Tax becomes refundable as a consequence of: (i)Judgment (ii)Decree (iii)Order (iv)Direction of Appellate Authority, AppellateTribunal or any Court |
Date of communication of such judgment, decree, order or direction | |
| Refund of unutilized input tax credit | End of the financial year in which such claim for refund arises | |
| Tax is paid provisionally under this Act or the rules made there under | Date of adjustment of tax after the final assessment thereof. | |
| In case of a person other than the supplier | Date of receipt of goods or services by such person | |
| In any other case | Date of payment of GST | |
Q 4. Is there any form for claiming refund under Section 48?
Ans. Yes, any registered taxable person, except the persons covered by notification issued under section 48(8)(f) of Revised Model GST Law, can file refund application of any tax, interest, penalty, fees or any other amount paid in FORM GST RFD-1 electronically through the Common Portal either directly or from a Facilitation Centre, notified by the Board or Commissioner. In terms of Draft Refund Rules under Goods and Services Tax, this application inter alia, is to be accompanied by a statement in Annex 1 of FORM GST RFD-1 containing the number and date of invoices received and issued during a tax period, where refund of any unutilized input tax credit is on account of rate of input tax being higher than the rate of output tax. Further, where the refund amount is 5 Lakh or more this application is to be accompanied by a Certificate in Annex 2 of FORM GST RFD-1 issued by a Chartered Accountant or a Cost Accountant to the effect that the incidence of tax and interest claimed as refund has not been passed on to any other person.
Q 5. To whom should the claim for refund be made?
Ans. The refund application is to be made before the proper officer of IGST/CGST/SGST.
Q 6. Can the refund of balance in cash or credit ledger be claimed?
Ans. Yes, as per provisions of Section 44(6), refund of the balance of cash or credit after payment of tax, interest, penalty, fee or any other amount payment can be claimed as per provisions of Section 48. Once the refund is claimed, the amount of credit of CGST/SGST/ IGST (as the case may be) would get reduced to that extent.
Q 7. Can any registered taxable person claim the refund under Section 48?
Ans. No. Refund can only be claimed under specified circumstances.
Q 8. Can United Nations Organisation claim refund?
Ans. Yes. UNO entities are entitled to claim refund of IGST/CGST/SGST paid on inward
supplies of goods and/or services.
Q 9. Is there any time limit for claiming refund by UNOs?
Ans. Yes, the refund application is required to be made before the expiry of 6 months from the last day of the month in which such supply was received.
Q 10. Can any taxable person claim refund of any unutilized ITC at the end of the tax period?
Ans. No, only the following taxable persons can claim refund of unutilized ITC:
(i) Persons undertaking exports (including other zero-rated supplies). [Exception: No
refund will be allowed on the goods exported out of India where such goods are
subjected to export duty [second proviso to Section 48(3)];
(ii) Credit has accumulated on account of rate of tax on inputs being higher than the
rate of tax on outward supplies (other than cases of nil-rated or fully exempted
supplies)
Q 11. Is there any condition to claim refund of unutilised ITC?
Ans. Yes. No refund of input tax credit shall be allowed if the supplier of goods or services claims refund of the output tax paid under the IGST Act,
Q 12. Is there any document to be enclosed along with refund claim? If yes, what are the documents to be submitted?
Ans. Yes, the following documents are required to be enclosed along with the refund application:
(i) Documentary evidence as may be prescribed, to establish that a refund is due to the applicant, and
(ii) Documentary evidence to prove that incidence of tax and interest had not been passed on to any other person.
Q 13. Is there any exemption from submitting the documents required for claiming refund?
Ans. Yes, if the refund claimed is less than rupees five lakhs, then documentary evidence for establishing that the refund is due, and that the incidence of tax/ interest has not passed, would not be required to be submitted. However, the taxable person may file a declaration based on the documentary or other evidence available with him, certifying that the incidence of such tax and interest is not passed on to any other person.
Q 14. Is there any way of obtaining a provisional sanction of refund claimed by the taxable person?
Ans. Yes, the proper officer may sanction refund of an amount up to ninety percent of the total amount of refund claimed, on a provisional basis in case of exporters. However, certain categories of persons may be notified, to whom provisional sanction of refund cannot be made.
Q 15. Is there any time limit for proper officer to pass final order after accepting the refund application?
Ans. Yes, the proper officer shall issue the order within sixty days from the date of receipt of refund application.
Q 16. Under what circumstances would refund be paid to the applicant?
Ans. On receipt of application, where the proper officer is satisfied as regards the refund application filed, he would pass an order sanctioning the refund. In the following situations, the refund sanctioned would be paid to applicant-
(i) refund of tax on goods and/or services exported out of India or on inputs or input services used in the goods and/or services which are exported out of India;
(ii) refund of unutilized input tax credit under Section 48(3)
(iii) refund of tax paid on a supply which is not provided, either wholly or partially, and for which invoice has not been issued
(iv) refund of tax in pursuance of Section 70
(v) the tax and interest, if any, or any other amount paid by the applicant, if he had not passed on the incidence of such tax and interest to any other person; or
(vi) the tax or interest borne by such other class of applicants as the Central or a State Government may, on the recommendation of the Council, by notification, specify. In all other cases, the amount sanctioned shall be credited to the Fund.
Q 17. Can the amount of refund sanctioned be adjusted towards any tax payable by the taxable person?
Ans. Yes, the refund due to taxable person can be adjusted towards tax, interest, penalty or any other amount which the taxable person is liable to pay but which remains unpaid under the Act or under any earlier law.
Q 18. Can refund sanctioned be withheld?
Ans. Yes, refund can be withheld until the taxable person has furnished the required return or paid the tax, interest or penalty.
Q 19. If an applicant had filed a refund application but all required documents have not been filed, can the application be said to be complete?
Ans. No, Explanation to Section 48(7) provides that the term ‘application’ shall mean complete application containing all information as may be prescribed.
Q 20. Has any minimum amount been specified below which no refund can be claimed?
Ans. No. However, it must be noted that if the amount of refund is less than rupees 1,000/-, then no refund can be paid.
Q 21. Whether separate applications need to be filed for refund in case of export of goods and export of services?
Ans. Yes, there shall be separate applications and different procedure for refund of export of goods and export of services.
Refund in certain cases (Section 49)
Q 22. Is there any other case apart from those covered in Section 48, wherein refund can be claimed under GST?
Ans. Yes, as per Section 49 of Revised Model GST Law, the Central/State Government may, on the recommendation of the GST Council, by notification, specify any other person or class of persons who shall be entitled to claim a refund of taxes paid on notified supplies of goods or services received by them.
Q 23. Is there any condition to be fulfilled to file refund claim under Section 49?
Ans. Yes, the conditions would be prescribed by way of notification/ rules.
Interest on delayed refunds (Section 50)
Q 24. Would interest be paid on the amount of refund sanctioned?
Ans. Yes, interest would be paid if the refund is not sanctioned with 60 days from the receipt of refund application. Interest rate is yet to be prescribed.
Q 25. How would the interest be computed and paid?
Ans. Interest would be computed and paid for the period after expiry of 60 days till the date of actual refund of tax.
Q 26. If refund is made by an Appellate Authority, Tribunal or any Court against an order of the proper officer, then would interest be paid?
Ans. Yes, however the interest would be computed from the date of order, and not the date of application.
Consumer welfare fund (Section 51)
Q 27. Is there any consumer welfare fund under GST?
Ans. Yes, this would be established by the Central / State Government.
Q 28. Can refund be credited to Consumer Welfare Fund?
Ans. Yes; however, the procedure is yet to be prescribed.
Q 29. Can the amount of tax sanctioned as refund be credited to fund?
Ans. Yes, an amount of tax under Section 48(5) or (6) can be credited to the fund account.
Q 30. Can amount credited to fund account be invested?
Ans. Yes, such amount can be invested by the Central/ State Government or the authorized persons.
Utilisation of fund (Section 52)
Q 31. Can amount credited to fund be utilised?
Ans. Yes, the fund can be utilised by the Central/ State Government for the welfare of the consumers. In this regard, rules are yet to be prescribed.
Q 32. Whether details of amount credited /debited to the fund are required to be maintained?
Ans. Yes, the Central/State Government shall maintain, or specify the authority who shall maintain the accounts in this regard.