GST Refund is an essential component of tax compliance for all types of businesses, exporters, and registered taxpayers in India. Generally, businesses are liable to pay GST on purchase of goods or services, export of goods, receipt of input services or undertaking any taxable activity. There are many instances where a business can claim a refund of its paid GST as per the provisions of the GST Act. Knowledge of eligibility criteria, documentation required and filing process of GST Refunds will help to avoid any unnecessary delays and possible rejections.
Knowing the procedure to claim GST refund for companies in Delhi will help to improve the cash flow, manage working capital and maintain proper tax records. If you are a company that exports, sells domestically or buys goods/services at a higher GST rate than that charged on your outward sales, you should know when you can claim a GST refund.
What is GST Refund under GST Law ?
GST refund is when you get back tax money that you paid to the government or if you paid excess tax to the government under GST law. You have paid excess GST. You have exported goods and/or services. You have an inverted duty structure. There are other conditions where you can claim GST refund.
A GST Refund application under Section 54 of the ‘Central Goods and Services Tax Act, 2017’, is submitted by the eligible taxpayers who have applied for a GST refund. The details given in the application submitted with its supporting documentation, are verified and the refund is processed as per the applicable rules of the GST Department.
To apply for GST refund in Delhi, businesses need to identify the type of GST refund they are applying for. This is because every type of GST refund requires specific documentation & proof.
Who Can Claim GST Refund in Delhi?
You will be eligible to get GST refund based on the nature of transaction, reason and time of tax payment. If you are an exporter who supplies goods/services to customers outside India, you may be eligible to claim a refund for any eligible accumulated input tax credits that you have. Or you can do the regular tax payment and refund route.
In case of a business having an inverted duty structure, it can claim a refund of the GST paid on inputs where the rate of GST charged on the inputs is higher than the rate of GST charged on its outward supply. There are certain requirements that need to be satisfied to obtain such refunds.
A refund may also occur where the taxpayer has paid too much GST, where the tax was misclassified at the time of payment, or where an eligible person has a positive balance in their electronic cash account. For a refund to be applicable, each application must meet the requirements specified in the relevant sections of the GST Act.
Common reasons for filing GST refund claims
GST Refund for Exports of Goods and Services
GST refunds are available to exporters who make zero rated supplies. Companies supplying zero rated supplies can export their products/services using either a Letter of Undertaking or Bond (without payment of IGST) and then claim refund of any unused portion of input tax credit eligible for refund on basis of specific criteria.
Refund of Inverted Duty Structure
When GST rates on inputs are higher than GST rates on final products, it is called inverted duty structure. Therefore, there could be unused input tax credits piling up which can be refunded to eligible companies as per GST rules.
Refund of excess GST paid
Sometimes businesses overpay GST due to a miscalculation, a mistaken second payment or an error in remitting the correct amount of GST. If you have paid excess GST, you are eligible to claim a refund under the GST refund procedure as prescribed.
Refund of Surplus Balance in E-Ledger of Cash-
Where a registered taxpayer has deposited excess amount in the electronic cash ledger over and above the due amount, he/she may claim the eligible excess amount as refund through the GST portal.
Documents Needed for Filing GST Refund
The Right Documentation is very important for the process of getting a refund from the Government of India through their GST system. The documentation you must provide will depend on why you are requesting the refund and what type of company or business you have.
Normally, the applicants have to submit their GST registration details, PAN details, bank account details, applicable tax invoices, purchase and sales records, GSTR-1 and GSTR-3B filings, input tax credit details, and supporting documents. Exporters will also have to submit shipping bills, export invoices, bank realization certificates (BRCs) or other acceptable forms of export related documentation.
Reducing errors during verification of refunds may be accomplished by providing complete and correct information, as well as verifying that the data on your invoice matches the information in your GST returns.
GST Refund Application Procedure through GST Portal
Eligible taxpayers may claim a refund on the GST portal under the Goods & Services Tax (GST) regime by choosing the relevant refund option and providing Form GST RFD-01, as applicable.
The applicant must enter the necessary details, upload the required supporting documents and finalize the application by following the provided verification steps. On successful submission of application, you will receive a unique Application Reference Number (ARN) to track the status of your application.
Your application is subject to scrutiny by GST Department and deficiency memo or further clarification if required may be issued. Once the claim is found to be valid and all eligibility conditions are met, the refund will be processed as per the relevant GST laws.
Time Limit to Claim GST Refund as per GST Rules
The prescribed period for presentation of your GST refund application is two years from the relevant date as prescribed under Section 54 of the CGST Act, 2017. the date involved will vary depending on the nature of the claim for refund.
Businesses need to ensure that they file their GST refund claims within the time frame, or they will become ineligible. Additionally, businesses that reconcile their GST returns, invoices and tax payments in a timely manner will be able to claim refunds accurately.
CBIC+1 (1)
Common reasons for rejection of GST refund application
A GST refund application can be delayed / rejected due to the following: – Incorrect invoice details; • Discrepancy in GST returns; • Missing documents; • Input tax credits that are not refundable; or • Mistakes in calculating the refund amount.
Companies may face problems during the verification process in case of discrepancies between their GSTR-1, GSTR-3B and purchase data. Before applying for a refund, a business must review all of its GST returns and the supporting documentation for those returns.
In addition to professional assistance for filing your GST refund claim, we will also provide you with help to find any discrepancies in your claim, assist you with preparation of the required supporting documentation for your claim and answer any questions from the GST department regarding your claim.
Why Professional GST Refund Assistance Matters
To claim a GST refund, a business must do much more than simply submit an online form. A business needs to be aware of the relevant GST rules, confirm that they have received input tax credits, check that their tax records are correct and then complete the correct refund process.
With help from a reputable chartered accountant (CA) firm, companies may be able to better handle all aspects of GST refund documentation, the filing of GST refund applications, complying with GST rules and regulations, and handling inquiries from the department. This kind of professional assistance is especially valuable to those who export goods/services, produce/manufacture products/goods, provide services, and/or have an accumulation of input tax credits.
Conclusion
Businesses can use GST refunds to obtain reimbursement of qualifying taxes and to improve their financial position. In order to receive a valid refund, businesses need to understand the criteria used to determine whether they qualify for a GST refund, when they are required to submit an application for a GST refund, what types of supporting documents are necessary to apply for a GST refund, and how to file an application for a GST refund.
For businesses that are looking for support and direction on their GST (Goods and Service Tax) Refund, Grover S & Company offers the GST Refund Services in Delhi to help with GST refund application processing, required documentation preparation, input tax credit reconciliation, and overall GST compliance.
