What Are The Provisions For GST Refunds, And How Can Businesses Claim Them?

Guide to GST Refunds for Businesses

1. Excess Input Tax Credit (ITC):

a. Scenario: When the input tax credit (ITC) accumulated in the electronic credit ledger is more than the output tax liability during a tax period.

b. Provision: Businesses can claim a refund of excess ITC accumulated in their electronic credit ledger.

c. Claim Process: Businesses can file a refund application in Form GST RFD-01 through the GST portal. They need to provide details of the excess ITC claimed and supporting documents such as invoices, purchase registers, and GSTR-3B returns.

2. Inverted Duty Structure:

a. Scenario: When the rate of tax on inputs is higher than the rate of tax on the output supplies (goods or services).

b. Provision: Businesses can claim a refund of the unutilized input tax credit attributable to the inverted duty structure.

c. Claim Process: Similar to excess ITC refunds, businesses need to file a refund application in Form GST RFD-01 and provide relevant details and supporting documents.

3. Export of Goods or Services:

a. Scenario: When goods or services are exported, and the taxes paid on inputs or input services are eligible for a refund.

b. Provision: Businesses can claim a refund of the accumulated ITC on inputs, input services, and capital goods used in the manufacture or provision of exported goods or services.

c. Claim Process: Businesses exporting goods or services need to file a refund application through the GST portal in Form GST RFD-01. They must submit supporting documents such as shipping bills, invoices, and export declarations.

4. Deemed Exports:

a. Scenario: When goods are supplied to specified categories of recipients, such as Advance Authorization holders, Export Oriented Units (EOUs), or suppliers providing goods to projects funded by international organizations.

b. Provision: Businesses can claim a refund of the accumulated ITC on inputs used in the manufacture of deemed export goods.

c. Claim Process: Similar to export refunds, businesses need to file a refund application in Form GST RFD-01 and submit relevant documents to support their claim.

5. Time Limit for Filing Refund Claims:

a. General Rule: Refund claims must be filed within two years from the relevant date, such as the end of the financial year in which the tax was paid or the date of export.

b. Exceptions: Different time limits may apply for specific refund scenarios, such as one year for inverted duty structure refunds and six months for deemed exports.