GST Refund : Procedure, Time Limit, Withholding, Interest

time limit, eligibility, provisional refund under gst

Application of Refund, Eligibility and Time Limit

Application for refund shall be made to the proper officer of IGST/CGST/SGST within two years from the relevant date in the prescribed manner. The time limit of two years will not apply where tax / interest / or any other amount has been paid under protest. Refund of the unutilized input tax credit can be claimed at the end of any tax period in the following cases:

  1. In case of exports of goods and / or services out of India on which export duty is not payable (including deemed exports)
  2. If rate of tax on inputs is higher than the rate of tax on outputs Cases where excess tax is paid by mistake and incidence is not passed are not covered under said Section.

Cases where excess tax is paid by mistake and incidence is not passed are not covered under said Section.

Relevant Date for Determination of Limitation Period

Relevant date for determination of limitation period of two years shall be in case of exports the date on which goods leaves India and in case of deemed exports shall be date on which the return relating to such deemed exports is filed.

In case of services, relevant date shall be date of receipt of payment in convertible foreign exchange if supply is prior to receipt and date of invoice, if payment is received prior to supply.

Documentary Evidence For Refund Under GST

The refund application has to be supported by prescribed documents evidencing facts that the refund is due to the applicant. The applicant must submit documentary evidences including invoice or similar document which are issued by him to indicate that the tax payable on the supplies, to establish the fact that incidence of tax/ interest/amount paid was not passed on by the claimant to any other person.

Self Declaration If Refund Claim is Less Than Rs. 5 Lakhs

If the amount of refund claim is less than INR 5 lakhs, there is no need of filing such documentary evidence. Instead, a self-declaration based on the documentary and other evidences by the claimant, certifying that he has not passed on the incidence of such tax and interest is sufficient to claim refund.

Time Limit For Sanction of GST Refund

The refund relating to an application if found in order, will be sanctioned within ninety days from the date of receipt of complete application containing all the prescribed information. The refund amount shall be credited to Consumer Welfare Fund if the incidence of tax has been passed to the buyer.

Provisional Refund

Provisional refund to the extent of eighty percent of the total amount claimed (excluding input tax credit not yet finalized) shall be allowed and remaining twenty percent may be refunded after due verification of documents furnished by the applicant.

Withholding or Deduction of Refund

Refund due will be either withheld or deducted in cases where a person defaults in furnishing any return, a person is due for payment of any tax, interest or penalty ordered, which is not stayed by Court or appellate Authority within 30 days after the last date for filing the appeal where appeal is filed or the expiry of time period for filing the appeal in cases where it is not filed.

There is no provision not to withhold the refund if the delay in obtaining the stay is due to the department as under SGST in serious cases department may seek more pre-deposit upto 50% which may take some time. Refund can also be withheld in cases where Commissioner/ Board is of the opinion that granting of refund would affect the revenue adversely. This can be done only after affording the taxpayer an opportunity of being heard.

Interest For Delay in Refund

Interest shall be paid by the Government if Tax paid becomes refundable under section 38 to the applicant; and it is not refunded within 3 months from the date of receipt of application for refund of tax under Section 38(1). Interest is liable to be paid from the due date for payment of refund till the date of sanction or grant of refund.

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