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How To File For GST Refund For Small Businesses And Exporters?

how to file gst refund for small business & exporters

The implementation of Goods and Services Tax or GST regime across India as on July 1st, 2017 was a historic decision by the Govt Of India. 

Introducing first-ever ‘One India One Tax’ concept, GST eliminated the needs of several states, centre taxes and excise duties and surcharges for businesses, and enabled a single platform, indirect tax regime which is muti-stage, and destination-based.

Within GST, Income Tax Department has clearly mentioned the GST refund procedure in detail, which helps businesses to claim excess GST paid on their good and services, along with exports, output tax and more scenarios.

In this article, we give an overview of the GST refund process, along with the GST refund process for exporters. We will also share details about refund application under GST, and dow to download RFD 01a from GST portal.

But first, let’s understand what the GST refund procedure is.

GST Refund Procedure Explained

In case any taxpayer has paid excess tax to the Govt due to any mistake in calculation or incorrect assessment of exports or output tax. There is a comprehensive and robust GST refund procedure, as applicable under the IT Act.

GST refunds are governed by Section 54(8) of the CGST Act.

Some of the scenarios under which the GST refund procedure is applicable:

  • In case there is a cumulative balance of input credit arising for exporters (such as a rebate)
  • An excessive amount of tax has been paid due to accounting mistake
  • An excessive amount of credit arising due to output tax being zero or any exemption
  • A provisional assessment results in an unexpected refund
  • Refund of the deposit made while filing an appeal for any tax-related issue, or any investigation by a tax officer
  • Refund provided by foreign countries or embassies of any country/United Nations
  • An excessive amount of credit arising due to the lower rate of output tax, compared to input tax
  • Due to credit notes, suppliers receiving refunds or discounts
  • Refund of GST which is paid by international tourists

In all these cases, the Govt will not issue a straightaway refund, but there is a GST refund procedure which needs to be followed. 

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Refund Application Under GST

Form RFD-01 is the foundation for the refund application process under GST.

The taxpayer needs to file Form RFD-01 within two years from the relevant date of payment of tax. Hence, the GST refund application time limit is 24 months, and the application for refund needs to be filed before that.

This Form RFD-01 for initiating refund application process under GST needs to be certified by a Chartered Accountant or a cost accountant.

While Form RFD-01 is for electronic filing of the refund, Form RFD-01a is not manual filing.

The relevant date or the GST refund application time limit is two years from the date of payment of tax, but there are several terms and conditions attached to this date. 

For example, in the case of exports, the relevant date is the date on which the ship leaves India. In case of road shipping, the relevant date is the date on which the vehicle leaves Indian borders.

Once the Form RFD-01 is submitted, an acknowledgement is made via Form RFD-02. 

In case of any discrepancy in information, Form RFD-03 is sent to the taxpayer to rectify the mistakes. After that, a provisional refund order is issued via Form RFD-04, mentioning 90% of the refund claim. 

Via Form RFD-05, the designated officer will issue the final order on the refund claim. This should be done within 60 days of the application, and in case the refund is not processed within 60 days, then the taxpayer will get 6% interest on the refund amount claimed.

How to download RFD 01a from GST portal?

You can download form RFD 01A for manual filing of GST refund here.

GST Refund Process For Exporters

GST Refund Process For exporters can be initiated only under two circumstances:

  • Supply of goods and services have been done under bonds or Letter of Undertaking, wherein no payment has been made under IGST. In this scenario, the GST refunds on exports can be claimed for unutilized input tax credit available for IGST, CGST and SGST.
  • Supply of goods and services has been done along with the payment of IGST. In this case, the exporters can claim GST refunds on IGST paid for the export of supplies.

While filing for the GST refunds, the exporter’s monthly GST returns needs to show these details:

  • Under Form GSTR1, export details under Table 6A and “shipping bill” details of the IGST paid on the supplies.
  • Under GSTR-3B, Valid details which are relevant to the export period needs to be shown.

Once these details are submitted, the GST portal shares the exporters’ data with ICEGATE.

ICEGATE is Indian Customs Electronic Gateway. This is the national portal of Indian Customs of Central Board of Indirect Taxes and Customs (CBIC).

ICEGATE matches the details submitted in the GSTR1 form, and if there is no discrepancy, the refund process is initiated. 

As per the GST laws, the refund is processed within 7 days of the submission, and the amount is directly credited to the taxpayers’ bank account. ICEGATE informs the GST portal about the exact details about the refund initiation, which is conveyed to the taxpayer via SMS and emails.

Need more information on the GST refund procedure? Wish to seek more clarity on Refund application under GST and the GST refund process for exporters?

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