About GST refund

Important things you need to know about GST refund

What is GST?

The term GST stands for Goods and Services Tax. Actually, GST is a destination based tax, which has been invented across the country since last July. This tax can replace the former central taxes as well as duties such as Special Additional Duty of Customs (SAD), Excise Duty, Counter Veiling Duty (CVD), Service Tax, local state taxes and also central charges. It is an indirect tax for the whole nation that aims to make a unified common market in India. This is also a single tax on the supply of goods as well as services directly from the manufacturers to the customers. 

About GST refunds

The GST is fully about a smooth flow of compliances as well as funds till the end. In order to assist a smooth flow, it is crucial for the government to offer for the hassle-free refund process. The existing tax structure is awkward and it takes more years to obtain refunds from the government. Usually, the GST offers a most effective and clearer invoice based tracking system, check the transactions on an individual basis and also allow the systematic checking of same. The GST refund process can make your life a lot easier. There are specific occurrences, where the refund happens. Let you check out the transaction of GST refund process in detail:

  • A refund may occur after the provisional assessment
  • Refund can be offered to foreign bodies or embassies of United Nations, when the purchases are made by them
  • Refund after findings or investigation by an adjudicating officer
  • Where there is an additional payment of tax because of an inadvertent mistake
  • When there is an accumulation of credit resulting because of the output tax being exempted or nil from tax
  • The GST paid by international or foreign tourists are subjected to refund
  • Suppliers are getting the credits or discounts via the issuance of credit notes

Normally, the government will not give away the pending amount as a refund. Every taxpayer has to create an application and follow the proper procedure for enticing the refund amounts into their bank accounts. 

GST refund application process

The GST refund application has to be made in a form of RFD-01. It can be certified by the chartered accountant within a time of two years from the relevant date. This date is something different for various scenarios.

  • Where the refund happens because of an order passed in support of the litigant, then the relevant date shall be a date of such order.
  • For any other cases, the relevant date should be a date of the payment of tax.
  • When the goods are exported via sea or air, the relevant date should be the date on which aircraft or ship leaves India.
  • When the goods are sent through the post, the relevant date should be the date of transmitting of goods from the post office.
  • When the goods are carried out by a land vehicle, the relevant date should be the date, where the goods traverse the land Fortier of the country.
  • When the supply consists of services and it is completed before the receipt of payment, the relevant date should be the payment receipt date.
  • As same as, when the services are performed after the receipt of payment, the relevant date should be the invoice date.

It is compulsory to remember in your mind that all these applicable dates as breakdown to file the repayment applications within a specific period of time that leads to obstruction of credit. Once the request has made, the acknowledgment in RFD-02 form will be instantly generated for the further references and also transfer across via an SMS and an email. In such case, the system gets some deficiencies in the refund application, the acknowledgment in RFD-03 form should be sent to the taxpayer to correct his application. 

GST refund of input tax credit

There are three cases against which refund claim could be made with respect to the input tax credit. Some of the scenarios covered GST refunds from the specific transactions are given below:

  • When the input goods or services have a huge rate of tax and the same have a lower output tax, the gathered input tax credit could be request as repayment.
  • In the partial return charge, the input tax credit will not be utilized fully against the output tax.
  • The input tax credit left unutilized, when the goods or services are being supplied as exempted or zero-rated from GST.
  • Moreover, no repayment against the unutilized input tax credit will be specified, when:
  • The input happens out of GST payment against the goods send overseas out of India, which is taxable to the excise duty.
  • The supplier has previously availed the advantages of duty drawback paid with respect to the excise duty.

Hence, the GST is paid more than the GST liability. Under the GST refund process, the process of getting the GST refund to normalize is to avoid disorder.

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