The biggest plus point of GST regime is that it has done away with cumbersome paperwork and bureaucratic interference by introducing the seamless online system of filing tax returns. A robust system ensures that taxes are calculated accurately, laws are being adhered to and timeliness is being maintained. However, many times businesses end up paying excess tax due to a variety of reasons including,
- Export of goods or services.
- Deemed exports as defined by Government of India.
- Refund of taxes on purchase made by international agencies like UN or foreign embassies.
- Refund arising because of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court.
- Refund of accumulated Input Tax Credit because of inverted duty structure other than nil rated or fully exempted supplies as defined by the law.
- Products or services supplied to Special Economic Zone (SEZ) based business units and developers.
- Refund of SGST & CGST paid by treating the supply as intra-State supply which is subsequently held as inter-State supply and vice versa.
- Finalisation of provisional GST return assessment.
- Excess payment due to wrong assessment or possible human error.
- Refunds to International tourists of GST paid on goods in India and carried abroad at the time of their departure from India.
- Refund because of issuance of refund vouchers for taxes paid on advances against which goods or services have not been supplied.
GST refund claim can be filed using form RFD 01 on the GST portal and it should be filed within 2 years of the relevant date. These reasons bring in the need to claim GST refund from the tax authorities which is visible in Electronic Cash Ledger to the tax payee and here’s a step by step guide on how to go about it.
- Login into the GST portal with this link – https://services.gst.gov.in/services/login
- Open the services tab on top and click on ‘Refunds’ to file the refund application. This will open the online application form which will be used to file the refund claim.
- Business owner needs to click on ‘Create’ button opposite ‘Refund of excess balance in Electronic Cash Ledger’.
- After clicking on create, a fresh window with Electronic Cash Ledger will appear which will showcase all the balances. Business owner should manually enter the values which need to be claimed as GST refund.
- After entering the values, next window will provide a drop-down menu to select the bank account in which the tax refund will be credited.
- Last step would involve ticking the checkbox to verify the authenticity of information provided for the refund; followed by selecting the authorized signatory, and finally submitting the claim by choosing between ‘Submit with DSC’ or ‘Submit with EVC’ (depending upon the organization type).
GST refund is a very important component of GST regime which provides complete transparency to the tax paying businesses and encourages them to file the taxes in a prescribed time bound fashion. This system also ensures that no business has paid excess tax and time bound refund enhances confidence of businesses in being tax compliant.