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How to Claim a Refund of Taxes Under GST in India?

Navigating the complexities of tax refunds under the Goods and Services Tax (GST) in India can be challenging. This guide aims to simplify the process, making it easier for businesses and individuals to understand how to claim refunds. The information is based on the CGST Act, 2017, and the accompanying rules, providing a comprehensive overview for all stakeholders, particularly those in the North Western region of India.

Understanding the Key Sections and Rules

The CGST Act, 2017, outlines the provisions for refunds in Chapter XI, while Chapter X of the CGST Rules, 2017, details the procedures. Here’s a breakdown of the key sections and rules:

• Section 54: Refund of tax
• Section 55: Refund in certain cases
• Section 56: Interest on delayed refunds
• Section 57: Consumer Welfare Fund
• Section 58: Utilization of Fund

The corresponding rules include:

• Rule 89: Application for refund
• Rule 90: Acknowledgment
• Rule 91: Grant of provisional refund
• Rule 92: Order sanctioning refund
• Rule 93: Credit of the amount of rejected refund claim
• Rule 94: Order sanctioning interest on delayed refunds

Situations Where Refunds Are Provided

Refunds under GST can be claimed in various situations, including but not limited to:

• Export of goods or services (including IGST or unutilized ITC)
• Supplies to SEZ units and developers
• Deemed export supplies
• Purchases made by UN or embassies
• Refunds arising from judicial decisions
• Accumulated ITC due to inverted duty structure
• Excess payments due to mistakes

How to Apply for a Refund

Eligibility Check: Ensure you meet the eligibility criteria for claiming a refund. Refunds are typically provided for zero-rated supplies, inverted duty structures, or specific cases such as purchases by international bodies.

Gather Documentation: Collect all necessary documents, including the original tax payment receipts, proof of export or supply, and any certificates issued by authorities.

Fill Out the Application Form: Complete Form GST RFD-01 for refund claims. Ensure all details are accurate and supported by the required documents.

Submit the Application: Submit your application online through the GST portal or manually if applicable. Keep copies of all submissions for your records.

Follow Up: Track the status of your refund application on the GST portal. Respond promptly to any queries or requests for additional information from the GST authorities.

Important Points to Note

• Timelines: The refund application must be made within two years from the relevant date. For exports, the shipping bill serves as the application for an IGST refund.
• Interest on Delayed Refunds: If the refund is not processed within 60 days, interest at the rate of 6% per annum is payable. For refunds arising from judicial decisions, the interest rate is 9%.
• Unjust Enrichment: The applicant must prove that the tax incidence has not been passed on to the consumer, except in cases where the refund amount is less than two lakh rupees.

Recent Updates

• Supreme Court Decision: The Supreme Court's decision in Union of India v. VKC Footsteps India Pvt Ltd clarified aspects of ITC refunds on input services and capital goods under the inverted duty structure.
• GST Council Meetings: The 45th GST Council meeting brought changes to refund rules, including timelines and conditions for claiming refunds.

By following these steps and understanding the legal provisions, you can ensure a smooth and successful tax refund process under GST. If you need further assistance, contact your local GST office or a qualified tax consultant.