Claiming GST refund has been always a very difficult, time consuming and cumbersome procedure. Under the GST regime the refund system is implemented as a standardized form for making any such claim for refunds. Under the new GST scheme and regulations, the claim and sanctioning procedure is to be completely online and time bound. Let’s understand GST Refund procedure step by step.

Goods and Service Tax (GST) is new tax regime introduced in India which has replaced major indirect taxes. After GST implementation approximately 17 indirect taxes regime will be substituted under one tax regime.This new tax regime is expected to bring a better control mechanism for tracking and payment of indirect taxes. GST will apply to almost every assesse in business, thereby boosting revenues for the government.

A very important concept for calculating and making GST payment is “Input Tax credit”. In simple terms, Input credit means the adjustment of GST tax payable on sales of goods or services against GST tax receivable on purchase.

There is always a possibility to have an un adjusted-unclaimed input credit balance at the month end due to GST taxes on purchases being higher than GST taxes on sale.

In such a case, you have two options: either to carry forward the un adjusted input tax credit for the next month and use the amount against next month payment or claim a refund.

Note: No interest is paid on excess GST input tax credit balance by the government.

Why Refund situation arises?

The below are the lists of situations or transactions wherein a refund situation for a GST tax-payer may arise:

  1. In case of any export of goods or services are made
  2. In case of any supplies are made to SEZs units and developers
  3. In case is there are any deemed exports
  4. Refund of taxes on purchase made by UN or embassies etc.
  5. Refund arising on account of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court
  6. Refund of accumulated Input Tax Credit on account of inverted duty structure
  7. Finalization of provisional assessment
  8. Refund of pre-deposit
  9. Excess payment due to mistake
  10. Refund on account of issuance of refund vouchers for taxes paid on advances against which, goods or services have not been supplied
  11. Refund of CGST & SGST paid by treating the supply as intrastate supply which is subsequently held as inter-State supply and vice versa.


Note: Any excess GST paid made can be claimed as a refund within 2 years from the date of such excess payment.


Refund of un utilized input tax credit can be claimed in the following two cases under GST:

  • There is availability of un-utilized input tax credit on zero-rated goods/services on which no payment of tax was made.
  • Accumulation of un-utilized Input Tax Credit due to higher tax rate on inputs than the output supplies.

Note: No refund of un utilized input tax credit would be allowed under the following cases:

  • If the supplier of goods has availed duty drawback on the excise duty paid or claims the refund on the integrated tax paid on such supply.


When should you claim the refund?

The refund application must be submitted within 2 years from relevant date in which such excess has been calculated or refund is arrived.


Steps to claim GST refund payment:

It’s a huge relief that all the process is made online and the tax-payer need not come to the authorities to collect the cheques or for any other issues relating to the refund claim.

Step 1: Login to Online GST Portal: with your GSTIN number and password.

Step 2: Go to ‘Services’ tax>then select ‘Refunds’ >Select ‘Application for Refund’

Step 3: Select ‘Refund of Excess Balance in Electronic Cash Ledger’ and click on ‘CREATE’.

Step 4: Once you click on ‘CREATE’, a screen will appear. Please enter all values of the refund to be claimed in the editable ‘Refund Claimed’ table.

Note: The application process for claiming refund shall include all documentary evidence as may be prescribed to establish that a refund is due to the applicant

Step 5: Select the Bank Account (in which you want the refund to be credited) from the drop-down and click on ‘SAVE’.

Step 6: Click on the checkbox in the declaration stating that all details submitted are true and fair. Then select the name of the ‘Authorized Signatory’ from the drop-down. (Based on the type of your organization click on ‘SUBMIT WITH DSC’ or ‘SUBMIT WITH EVC’)

Step 7: After completing all steps, Refund ARN Receipt is generated in PDF format.

Step 8: After proper inspection of refund claim by a GST officer, refund amount will be credited to the bank account as quoted by the tax payers. In case the claim is to be rejected by the Proper Officer, a notice would be sent online to the applicant stating the ground on which the refund has been rejected. The applicant needs to respond within 15 days from the receipt of such notice.


Refund claimed by different tax-payers:

  • If the person who has borne the Incidence of Tax is claiming the refund benefit, then the refund claim would be processed in accordance with the provisions of Section 54 of the CGST Act, 2017.
  • Refunds to Casual/Non-Resident Taxable Persons: As per the GST law, Casual/Non-resident taxable person has to pay tax in advance at the time of GST registration and such persons and business can claim refund at the end of the registration period. The refund in such scenario arises because the tax paid in advance maybe more than the actual tax liability on the supplies made by them during the period of validity of registration period. But the amount of excess advance tax shall not be refunded unless such person has filed all the returns due during the time their registration was effective. It is only after such compliance that refund will be granted.
  • Refund to UN Bodies and Other Notified Agencies: Supplies made to UN bodies and embassies is exempted from payment of GST as per international obligations. However, this exemption is being operationalized by way of a refund mechanism.So, a taxable person making supplies to such bodies would charge the tax due and remit the same to government account. However,the UN bodies and other entities notified under Section 55 of the CGST Act, 2017 can claim refund of the taxes paid by them on their purchases. The claim has to be made before the expiry of six months from the last day of the quarter in which such supply was received.
  • Refund to International Tourist: A new mechanism has been introduced under Section 15 of the IGST Act, 2017 whereby an international tourist procuring goods in  India, may while leaving the country seek refund of integrated tax paid by them.


Amount criteria under Refund claims and document required under Goods and Service Tax:

Please note, if the amount of refund claimed is less than Rs.2 lakhs then the taxpayer can submit a self-declaration stating the incidence of tax has not been passed to any other person. This declaration will suffice for the purpose of processing the refund claim.

For refund claims exceeding Rs. 2 Lakhs, a certificate from a Chartered Accountant/Cost Accountant will have to be given. It is to be noted that such document need not be given if it is a claim arising on account of zero rated supplies or claim of accumulated input tax credit or payment of wrong tax.


When will you get the refund amount?

The claim of refund in case correct and validated has to be sanctioned within a period of 60 days from the date of receipt of the claim. If this mandatory period is exceeded or not complied with then the applicant is liable to receive an interest @ 6% and 9% (as the case may be) for a period from when the amount becomes payable till the date such payment of refund is made.


Court may withhold GST tax refund amounts

Also an important thing to note is, where an court order is giving rise to a refund and the same is subject matter of an appeal or further proceedings or where any other proceedings under this Act is pending and the Commissioner is of the opinion that grant of such refund is likely to adversely affect the revenue in the said appeal or other proceedings on account of fraud committed, he may, after giving the taxable person an opportunity of being heard, withhold the refund till such time as he may determine.

The above article provides you end-to-end procedure for claiming and managing your refund. Claiming refund is a very important aspect as the business money is held by government and thus proper procedure are to be adopted for claiming the refund amount. Now-a-days there are many software available for helping you to arrive and calculate the GST refund amount and help you process your claims.


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