The Goods and Services Tax (GST) regime in India was meant to make businesses hassle-free and more compliant. But, the mammoth of unclear guidelines have made it rather difficult for them.
Among other things, businesses sometimes end up paying more taxes than they owe. In cases like that, they can ask for a refund.
Here are more details.
A little about GST refunds
The GST regime was introduced in the country as a more efficient and effective way to charge taxes on manufacturers and exporters. Its structure also lets businesses get refunds, if eligible. There are as many as 12 situations that entitle taxpayers to claim GST refunds.
Cases or events where taxpayers are eligible for GST refunds
Businesses are eligible for GST refund when they have export transactions or deemed export transactions where they have cumulative balance of input credit or rebate claim in process for such transactions.
Refunds are also applicable over supplies to developers/units in special economic zones and when embassies make purchases.
Other scenarios include pre-deposit refund and accrued input tax credit refund because of inverted duty structure.
GST payments made by foreign tourists are refundable
Situations that lead to GST refunds include excess payment due to error, refunds arising from a judgment, order, or decree, and finalization of provisional assessment.
Refunds are applicable on vouchers in possession for taxes paid in advance for goods/services that weren't supplied, GST payments made by foreign tourists, and CGST and SGST paid by considering the supply in the course of interstate trade.
What is the procedure to claim GST refund?
To claim GST refund, one can visit the online GSTN portal and file a claim by filling the GST refund application form RFD-01.
They will receive an SMS/email containing RFD-02 form (acknowledgment). If there are errors in the claim, RFD-03 form is generated and sent to the applicant for making necessary corrections in their application. The refund is credited to the applicant's account electronically.
Claims should be filed within two years from relevant date
Eligible taxpayers are allowed to submit their GST refund applications at the end of each quarter. However, taxpayers need to file their claim for GST refund within two years from the relevant date. The relevant dates are different for different types of GST refund scenarios.