REFUNDS IN GST
Explore the intricacies of claiming refunds under the GST regime with insights from Shalimar Study Circle of NIRC of ICAI. Delve into the guidelines and procedures outlined by Ashu Dalmia on 8th June 2018 to ensure smooth processing of refunds. Stay informed on the latest updates and nuances surrounding GST refund mechanisms for a seamless refund claiming process.
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REFUNDS IN GST Shalimar Study Circle of NIRC of ICAI Shalimar Study Circle of NIRC of ICAI Ashu Dalmia 8th June 2018
Refund of the excess balance amount available in the Cash Ledger Refund of the Integrated Tax paid on goods exported out of India Refund of Integrated tax paid on the services exported out of India Refund of ITC accumulated against the inputs and input services attributed to supply of export of goods or services. Refund of ITC accumulated due to inverted tax structure Refund of Integrated tax paid against any deemed export Refund of Integrated tax, paid on export of goods/services to SEZ developers/ units Refund of ITC attributed to the goods and / or services exported to SEZ units / developers Refund of ITC on account of deemed export 3
Refund Application of an Embassies/Consulate, UNO agency or Multilateral Financial Institution and organization Refund of Interest paid due to mismatch of ITC. Refund of IGST to International Tourist at the time of leaving India Refund by unregistered person Refund Payment due to Statutory order of the adjudicating authority/courts/ tribunal etc. Casual Person/non- resident taxable person refund 4
Refund of GST Against Export IGST,CGST+SGST/U TGST ,CESS paid on Inward Supply Rule 89 IGST Paid of outward Supply Rule-96 Restriction-Deemed Export/Merchant Exporter 89 (4) 89 (4A) 89 (4B) 6
Track status on GSTN of invoice data to be shared with ICEGATE 7
IGST refund for exports cannot be claimed: By exporters who are directly receiving goods from those suppliers who are availing the benefit under notification No. 48/2017-Central Tax dated the 18th October, 2017, notification No. 40/2017-Central Tax (Rate) dated the 23rd October, 2017, notification No. 41/2017-Integrated Tax (Rate) dated the 23rd October, 2017 notification No. 78/2017 Customs dated the 13th October, 2017 notification No. 79/2017-Customs dated the 13th October,2017. 9
Notification Notification No. 79/2017 No. 79/2017 of Custom of Custom Seek to amend various Customs exemption notifications to exempt Integrated Tax/Cess on import of goods under AA/EPCG. schemes Notification Notification No. 78/2017 No. 78/2017 of Custom of Custom Seeks to exempt goods imported by EOUs from integrated tax and compensation cess Notification Notification No. 40/2017 No. 40/2017 of CTR of CTR Merchant Exporter exempt tax in excess of 0.05% in case of Intra state supplies Notification Notification No. 41/2017 No. 41/2017 of IGST(Rate) of IGST(Rate) Merchant Exporter exempt tax in excess of 0.1% in case of Inter state supplies Notification Notification No. 48/2017 No. 48/2017 of CT of CT Supplies to be treated as Deemed Export 10
Exception to this restriction:- CGST circular 45/2018 dated 30th May 2018 Restriction is not applicable when Supplier has not availed the benefit, however who have in turn received the goods from registered person availing the benefit. Goods manufactured from such capital goods imported under such benifit 11
IGST Refund Not Granted Mismatch in Form 3b and GSTR 1 Mismatch in Shipping Bill /EGM and GSTR 12
Mismatch in GSTR 3B and GSTR 1-Goods Data Not Transmitted from GSTN Short Payment No Short Payment IGST paid 3.1 (a) and 3.1(b) >=GSTR1 For July to March 2018 IGST paid 3.1(a)(3.1b)<=GSTR1 13 Custom Circular 12/2018 dated 29th May 2018
Mismatch in GSTR 3B and GSTR 1-Goods Process for no Short payment cases: Process for no Short payment cases: Chartered Accountant Certificate by 31st October to office at the port of export along with copy to jurisdictional GST office List will be Sent to DG (Audit)/DG(GST) 14 Custom Circular 12/2018 dated 29th May 2018
Mismatch in GSTR 3B and GSTR 1-Goods Process for Short payment cases: Process for Short payment cases: For short amount up to 10 lacs self-certified copy of challan to concerned custom office of port of export For short amount more than10 lacs copy of challan to concerned custom office of port of export along with CA certificate that shortfall amount has been liquidated Accountant Certificate by 31st October to office at the port of export along with copy to jurisdictional GST office List will be Sent to DG (Audit)/DG(GST) 15 Custom Circular 12/2018 dated 29th May 2018
Mismatch in GSTR 3B and GSTR 1-Services Clarification:- Issues: Issues: Allowed to file refund for July to March 17 subject to the condition that the amount of refund of integrated tax/cess claimed shall not be more than the aggregate amount of integrated tax Error in filing GSTR-3B: Shown in Column 3.1(a) instead of column 3.1(b) While correct filing of GSTR-1 CGST Circular 45/2018 dated 30th May 2018 if correction not possible as per CGST circular 26/2017 dated 29th Dec 2017 16
Mismatch in Shipping Bill,EGM,GSTR Error Error Solution Solution EGM mismatch/ not filed GSTIN mismatch Custom Circular 06/2018 dated 16.03.2018 - Invalid SB Details Circular 37/2018 dated 15.03.2018 Invoice Mismatch Circular 37/2018 dated 15.03.2018 Custom Circular 05/2018 dated 23.02.2018 Custom circular 8/2018 6th June 2018 17
Mismatch in Shipping Bill,EGM,GSTR Error Code Error Code Description Description Procedure to amend errors. Procedure to amend errors. Error code Error code no. SB001 no. SB001 Incorrect SB number in GSTR 1/Table 6A Rectified by making amendments in GSTR 1 by using Form 9A. Form 9A has been made available by GSTN w.e.f. 15.12.2017 in exporter s login at the GST common portal (Circular no. 42/2017 dated 7/11/2017) Exporter has to approach their shipping line/airline/carrier to file the EGM immediately. Error code Error code no.SB002 no.SB002 EGM not filed 18
Mismatch in Shipping Bill,EGM,GSTR Error Code Error code no. SB003 Description GSTIN declared in the SB does not match with the GSTIN mentioned in the corresponding GST return error due to duplicate/ repeat transmission of shipping bill-invoice record from GSTN error due to mis-match of invoice number as declared in the invoice table of the shipping bill and that declared in the GSTR 1 for the same supply Procedure to amend errors. Exporter has to make necessary changes in GSTR 1 by use of amendment Form 9A. Exporters should note that there is no provision of amendment in the shipping bill once the EGM is filed. The previous transmission would have already been validated for IGST refund by ICES Error code no. SB004 If SB005 is due to a data entry mistake in GSTR 1, it can be amended in Form 9A. But any mistake in the SB cannot be amended once EGM is filed. Also, if the exporter has used a separate invoice in the SB, he cannot include that in his GSTR 1 in lieu of his GST invoice. Thus, SB005 error, as of now, cannot be corrected by any amendment either in GSTR-1 or in the Shipping Bill. Error code no. SB005 19
Details for Refund rule 89 Manner of Computation of Refund of Unutilized ITC Least of the following is eligible: i. Closing balance of ITC before claiming refund ii. Maximum refund amount computed as per formula mentioned under Rule Rule 89 89( (4 4) ) of of CGST CGST Rules Rules given below Formula u/r 89(4): Formula u/r 89(4): Refund Amount = Turnover of Zero-Rated Supply of Goods/Services X Net ITC Adjusted Total Turnover 21
Notes: 1. Refund amount : Maximum admissible refund. 2. Net ITC : ITC availed on inputs and input services during the relevant period other than the input tax credit availed for which refund is claimed under sub-rules (4A) or (4B) or both. 3. Turnover of zero-rated supply of goods : means the value of zero-rated supply of goods made during the relevant period without payment of tax under bond or letter of undertaking, other than the turnover of supplies in respect of which refund is claimed under sub-rules (4A) or (4B) or both; 4. Turnover of zero-rated supply of services : means the value of zero-rated supply of services made without payment of tax under bond or letter of undertaking, calculated in the following manner, namely:- Zero-rated supply of services is the aggregate of the payments received during the relevant period for zero-rated supply of services (+) zero-rated supply of services where supply has been completed for which payment had been received in advance in any period prior to the relevant period (-) advances received for zero-rated supply of services for which the supply of services has not been completed during the relevant period; 22
Notes: 5. Adjusted Total turnover : means the turnover in a State or a Union territory i.e. the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis) and exempt supplies made within a State or Union territory by a taxable person, exports of goods or services or both and inter-State supplies of goods or services or both made from the State or Union territory by the said taxable person but excludes central tax, State tax, Union territory; The following will be excluded (a) the value of exempt supplies other than zero-rated supplies and (b) the turnover of supplies in respect of which refund is claimed under sub rules (4A) or (4B) or both, if any, during the relevant period. 6. Relevant period : means the period for which the claim has been filed. As per Circular No. 37/11/2018-GST, the exporter, at his option, may file refund claim for one calendar month / quarter or by clubbing successive calendar months / quarters. The calendar month(s) / quarter(s) for which refund claim has been filed, however, cannot spread across different financial years. 23
Rule 89(4A) and 89(4B) Supplies on which the supplier has availed certain benefits Rule 89(4A) Supplies to be treated as Deemed Export Notification No. 48/2017-CT ITC in respect of other inputs and input services used in making zero-rated supply shall be granted as refund 24
Rule 89(4A) and 89(4B) Supplies on which the supplier has availed certain benefits Rule 89(4B) Merchant Exporter in case of Intra-state supplies Notification No. 40/2017-CTR Merchant Exporter in case of Inter-state supplies Notification No. 41/2017-IGST(Rate) Goods imported by EOU Notification No. 78/2017-Custom Import of goods under AA/EPDG Schemes Notification No. 89/2017-Custom ITC in respect of other inputs and input services used in making zero-rated supply and ITC in respect of inputs received under the said notifications shall be granted as refund 25
Example Particulars Amount (Rs.) Export Turnover (without payment of tax) 75,000 Domestic Turnover (Inter-State) 1,25,000 Output IGST (125000*18%) (Dr. In Electronic Liability Ledger) 22,500 ITC availed during the relevant period - IGST (Cr. In Electronic Credit Ledger) 9,500 CGST (Cr. In Electronic Credit Ledger) 9,500 SGST (Cr. In Electronic Credit Ledger) 9,500 26
Computation of Refund Step 1: Maximum refund amount as per formula under Rule 89(4) Particulars IGST CGST SGST Refund Amount 9,500 X 75,000 2,00,000 9,500 X 75,000 2,00,000 9,500 X 75,000 2,00,000 3,563 3,563 3,563 Step 2: Closing balance of ITC before claiming refund Particulars IGST CGST SGST ITC Availed (Cr. In Electronic Credit Ledger) 9,500 9,500 9,500 Utilization of ITC for payment of Output IGST Rs. 22,500 (Dr. In Electronic Credit Ledger & Cr. In Electronic Liability Ledger) 9,500 9,500 3,500 Closing balance of ITC (Cr. In Electronic Credit Ledger) Nil Nil 6,000 Step 3: Eligible amount of Refund Particulars IGST CGST SGST Least of Step-1 and Step-2 Nil Nil 3,563 27
DOCUMENTS AND INFORMATION FOR ITC REFUND
Rule Description Documentary Evidence/Details Statement Number as per RFD 01 A 3 Refund on account of export of goods Refund on account of export of services Refund on account of supply of goods made to SEZ unit/developer If supplier claims refund than a declaration to the effect that SEZ unit/developer has not availed ITC Shipping Bill or Bill of Export Export Invoice Export Invoice Copy of BRC/FIRC for export of services Tax (Export) Invoice Endorsement specified in the 2nd proviso to Rule 89(1) 89(2)(b) 2 & 3 89(2)(c) 4 89(2)(d) and 89 2(f) Refund on account of supply of services made to SEZ unit/developer Tax (Export) Invoice Endorsement specified in the 2nd proviso to Rule 89(1) Details of payment 4 89(2)(e) and 89(2)(f) If supplier claims refund than a declaration to the effect that SEZ unit/developer has not availed ITC Refund on account of Deemed Exports Tax (Export) Invoice Evidence as may be notified by the Government 5B 89(2)(g) Refund on account of Inverted duty structure (Other than NIL rated or fully exempt supplies) Tax Invoice issued Tax invoice received 1A 89(2)(h) 29
List of Documents required for processing the Refund Type of Refund Type of Refund Export of Services with payment of tax Export of Services with payment of tax (Refund of IGST paid on export of (Refund of IGST paid on export of services) services) Documents Documents Copy of FORM RFD-01A filed on common portal Copy of Statement 2 of FORM RFD-01A Invoices w.r.t. input, input services and capital goods BRC/FIRC for export of services Undertaking / Declaration in FORM RFD-01A Export (goods or services) without Export (goods or services) without payment of tax (Refund of payment of tax (Refund of accumulated ITC of IGST / CGST / accumulated ITC of IGST / CGST / SGST / UTGST / SGST / UTGST / Cess Copy of FORM RFD-01A filed on common portal Copy of Statement 3A of FORM RFD-01A generated on common portal Copy of Statement 3 of FORM RFD-01A Invoices w.r.t. input and input services BRC/FIRC for export of services Undertaking / Declaration in FORM RFD-01A Cess) ) CGST Circular 37/2018 15 CGST Circular 37/2018 15th thMarch 2018 March 2018 30
REFUND CLARIFICATIONS CIRCULAR 45/2018 DATED 30TH MAY 2018
Unutilized ITC of compensation cess availed on inputs in cases where final product is not subject to levy of Cess Cess is not leviable on aluminum product however cess is applicable on coal which is input for aluminum product it is clarified that a registered person making zero rated supply of aluminum products under bond or LUT may claim refund of unutilized credit including that of compensation cess paid on coal. 32
Whether bond or LUT is required for export of exempted or non GST goods and Whether refund can be claimed by the exporter of such goods -LUT/bond is not required -Shall comply with the requirements prescribed under the existing law -exporter would be eligible for refund of unutilized ITC 33
CGST ACT 2017 CGST ACT 2017 SECTION SECTION 49(6) 54(1) 54(2) 54(3) 54(4) 54(5) 54(6) 54(7) 54(8) 54(9) 54(10) 54(11) 54(12) 54(13) 54(14) DESCRIPTION DESCRIPTION Refund of Balance in the electronic cash ledger or electronic credit ledger Refund of Tax & Interest Refund by Specified Persons Refund of ITC Documents with Refund Application Refund Order Provisional Refund Refund Order within 60 days from receipt of application Refund Available - Cases No refund except specified u/s 54(8) Withhold refund of ITC or deduct any tax, interest, etc due from refund Withholding of refund due to any appeal, pending proceedings Interest for withheld refund Advance tax by casual / non-taxable person No refund below Rs. 1,000/- 35
SECTION SECTION 55 56 57 58 77 DESCRIPTION DESCRIPTION Refund in Certain Cases Interest on Delayed Refunds Consumer Welfare Funds Utilisation of Fund Tax wrongfully collected and paid to Central Government or State Government IGST ACT 2017 IGST ACT 2017 SECTION SECTION 16 15 DESCRIPTION DESCRIPTION Zero Rated Supply Refund to International Tourist 36
CGST Rules 2017 CGST Rules 2017 SECTION SECTION 89 90 91 92 93 94 95 96 96A DESCRIPTION DESCRIPTION Application for refund of tax, interest, penalty, fees or any other amount Acknowledgement Grant of Provisional refund Order Sanctioning Refund Credit of the amount of rejected refund claim Order sanctioning interest on delayed refunds Refund of tax to certain persons Refund of integrated tax paid on goods exported out of India Refund of integrated tax paid on export of goods or services under bond or Letter of Undertaking Consumer Welfare Fund Manual filing and processing 97 97A 37
REFUND FORMS REFUND FORMS Refund Forms Description Application for Refund GST-RFD-01 Application for Refund (Manual) GST-RFD-01A Refund order details (Manual) GST-RFD-01B Acknowledgement GST-RFD-02 Deficiency Memo GST-RFD-03 Provisional Refund Order GST-RFD-04 Payment Advice GST-RFD-05 Refund sanction/Rejection Order GST-RFD-06 Order for Complete adjustment of sanctioned refund GST-RFD-07 Notice for rejection of application for refund GST-RFD-08 Reply to show cause notice GST-RFD-09 Application for Refund by any specialized agency of UN or any Multilateral Financial Institution and Organization, Consulate or Embassy of foreign countries, etc. Furnishing of bond or Letter of Undertaking for export of goods or services GST-RFD-10 GST-RFD-11 38
Meaning of Deemed Export Section 2(39) of CGST Act 2017- deemed exports means such supplies of goods as may be notified under section 147; Section 147 of CGST Act :- The Government may, on the recommendations of the Council, notify certain supplies of goods as deemed exports, where goods supplied do not leave India, and payment for such supplies is received either in Indian rupees or in convertible foreign exchange, if such goods are manufactured in India. 42
Supplies to be Deemed Export Notification no. 48/2017 of Central Tax dated 18/10/2017 1. Supply of goods by a registered person against Advance Authorisation (Chapter 4 of FTP) 2. Supply of capital goods by a registered person against Export Promotion Capital Goods Authorisation (Chapter 5 of FTP) 3. Supply of goods by a registered person to Export Oriented Unit (Chapter 6 of FTP) 4. Supply of gold by a bank or Public Sector Undertaking specified in the notification No. 50/2017-Customs, dated the 30th June, 2017 (as amended) against Advance Authorisation. 43
Refund under Deemed Exports Who Can Apply for Refund Notification no. 47/2017 of Central Tax dated 18/10/2017 Refund by Recipient of deemed export supplies Refund by Supplier of deemed export supplies 44
Return for Deemed Exports Return GSTR-01-Table 6C GSTR-3B- Table 3.1 (a) 45
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