Under certain conditions, the GST Law reimburses taxes paid on inward supply or unused input credits. A standardized form will be available for filing any refund claims under the GST regime. The current lengthy and laborious process will be significantly changed by the claim and sanctioning system, which will be entirely online and time-bound. The CGST Act, 2017’s Sections 54 and 77 contain pertinent clauses, while Rule 1(2) of the Refund Rules’ requirements for the filing of pertinent documents list the numerous circumstances that may call for a refund claim. The following explains the situations under which GST refunds are available, the requirements that must be met, and the steps involved in doing so:

The scenario:

• Export of Goods or Services
• Deemed Exports which includes
  • Supply of goods by the registered person against Advance Authorisation (AA) i.e. Supplier must be registered under GST and recipient must be an Advance Authorisation holder
  • Supply of capital goods by the registered person against Export Promotion Capital Goods Authorisation (EPCG)
  • Supply of goods by the registered person to Export Oriented Unit (EOU)/ Electronic Hardware Technology Park Unit (EHTP) / Software Technology Park Unit (STP) / Bio-Technology Park Unit (BTP)
  • upply of gold by Bank or Public Sector Undertaking against AA

• Supply of goods or services to an SEZ developer or an SEZ unit or for the authorised operations of an offshore banking unit

Credit for unutilized input taxes:

• In the following situations, the refund of unused input credit may be requested after any tax period:

• If the tax rate on inward supplies (also known as inverted rated supplies) is higher than the tax rate on outgoing goods,

• in cases where exports of products, services, or both were made without the payment of IGST, including supply to SEZ.

• Paid taxes: After any tax period, the following situations allow for the demand for a tax refund:

• Exports of products, services, or both, subject to IGST payment

• Paid tax on the anticipated export

• Overtax payment

• Tax payment temporarily

• A non-resident taxable person or a casual taxable person may pay advance tax under Section 27(2). However, unless the individual has provided all the returns required by Section 39, i.e., filed during the registration period, the sum will not be returned.

• When paid on intrastate supplies, CGST, SGST, and UTGST are retained as interstate supplies.

• Reimbursement of taxes paid by a foreign consulate or embassy, or by a specialized UNO agency:

On inbound deliveries of products, services, or both, by submitting a refund request no later than six months following the conclusion of the quarter in which the supply was obtained.

• Refund for foreign visitors

When an international visitor purchases goods in India and requests a refund of the IGST paid while departing the country, the refund of the IGST paid will be granted at the port of departure as long as sufficient documentation is produced to confirm the visitor’s legitimate non-immigrant entry into India. But the foreign visitor will not include:

• people who are residents of India who travel abroad, whether or not they have an Indian passport, for extended periods.

• Indian resident deputation to diplomatic positions abroad.

• Offspring born in India while visiting the country as foreign nationals.

Refund is not applicable on the following goods or services

• Supply of goods or services to an SEZ developer or an SEZ unit or for the authorised operations of an offshore banking unit
• Supply of goods or services to an SEZ developer or an SEZ unit or for the authorised operations of an offshore banking unit
• Supply of goods or services to an SEZ developer or an SEZ unit or for the authorised operations of an offshore banking unit

Recordkeeping for the Refund Request: 

Attached to the refund application should be documentation of any taxes, interest, or other amounts paid, invoices, and copies of the evidence of tax deposit.

If the requested reimbursement is less than Rs. 2 lakh,

The applicant may submit a declaration based on the evidence that is currently available rather than providing documentary proof.

Revenue from exports obtained using “PayPal”

Acquiring the FIRCs If the export revenues are deposited into a PayPal account, PayPal will first convert the USD to INR on its end and then forward the funds to Citibank India, who will then transmit the INR NEFT transaction to the appropriate bank account of the Indian service providers. The applicant’s bank, which received the money from PayPal, can submit a request for a financial inclusion certificate (FIRC) for cash obtained through PayPal to Citibank India.

How to claim a refund:

• The application must be submitted using the GSTRFD-01 form.

• The applicant will receive an acknowledgment in form GSTRFD-02 within 15 days after completing the application.

• Should a discrepancy be identified, notification must be sent via GSTRFD-03.

• Following a review of the claim, the PO will issue a provisional order in form GSTRFD-04, authorizing the refund amount within 7 days of the note’s date, if export proceeds are being refunded under section 54(6). 90% of the sum will be awarded, provided that the individual requesting the refund has not been charged with any Act-related crimes in the five years prior, and that their tax evasion has not exceeded Rs. 2,500.

• PO will send out a GSTRFD-05 payment advice.

• PO makes a final order under GSTRFD-06 for the actual amount of refund after reviewing all the documentation.

• PO is required to give an order in GSTRFD-07 if he believes that the refund amount may be withheld.

• If the PO determines that all or a portion of the amount claimed as a refund is not admissible, he will notify the applicant using form GSTRFD-08 and demand that he provide a response using form GSTRFD-09.

Interest on the Refund:

• After 60 days have passed since the government received the refund application, interest at the rate of 6% will be paid by the government.

• If the government receives an application for a refund based on an order issued by the adjudicating authority, appellate authority, or appellate tribunal, it will pay interest at the rate of 9% starting on the date that 60 days have passed since the application was received.

• Applications for refunds must be processed within 60 days of the day they are submitted.

• If the sum is less than Rs. 1,000, there will be no return.