The concept of refund in the parlance of GST is a crucial aspect for a taxpayer as it facilitates trade by releasing blocked funds for working capital, expansion and modernisation of existing business. The GST refund can arise on account of excess cash balance in the electronic cash ledger or the accumulated Input Tax Credit unable to be utilised for tax payments due to zero-rated sales or inverted duty structure or on account of various other reasons that have been discussed below in the article.
The refund provisions in the GST law aim to streamline and standardise the GST refund procedure. Under the GST regime, there is a standardised form for making any claim for refunds. The claim and sanctioning procedure are primarily online and time-bound, which is a marked departure from the earlier time-consuming and cumbersome process.
In this article, we have tried throwing some light upon the important facets of GST Refund...
A claim for a GST refund may arise in the following situations:
* Refund of IGST paid on a specified class of goods and/or services exported by a specified class of persons.
* Refund of IGST paid on goods and/or services supplied for authorised operations to an SEZ developer/unit by a specified class of persons.
* Refund of unutilised ITC in case of exports or supply to SEZ developer/unit for authorised operations without payment of IGST or in the case of inverted duty structure.
* Refund of taxes paid on the supply of goods considered as deemed exports.
* Refund of any excess balance in the electronic cash ledger after payment of tax dues and other dues payable under the CGST Act or the rules made there under.
* Refund of taxes paid on a supply which is actually not made, either wholly or partially, and for which the invoice hasn’t been issued (tax paid on advance payment).
* Refund of tax wrongly collected and deposited to the Government (i.e., IGST paid by treating the supply as inter-state supply, which is subsequently held as intra-state supply and vice-versa).
* Refund of the IGST paid by tourists leaving India on any supply of goods taken out of India by him.
* Tax becoming refundable due to judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any Court.
* Any tax becoming refundable to the taxpayer on finalisation of provisional assessment (on account of assessed tax on the final assessment being less than the tax deposited by the taxpayer).
* Refund of taxes paid on purchases made by UN bodies or embassies, etc.
* Refund of taxes to retail outlets established in the departure area of an international airport beyond immigration counters, making a tax-free supply to an outgoing international tourist.
* Refund of advance tax paid by a casual taxable person/Non-resident taxable person.