GST Refund Process: How to Claim, Eligibility, Documents Required

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What is GST Refund?

A GST refund is the process by which registered taxpayers can claim an excess amount if they have paid more than what they owe. They can file a refund with necessary details on the GST portal.

Cash flow and working capital requirements of producers and exporters may be adversely affected if GST refunds are delayed. Therefore, one of the objectives of the GST implementation is to ensure that the returns process is simplified so that manufacturers and exporters do not face any problem due to delay. Tax administration is made more efficient by the speedy course of the GST refund process.

The GST system has refund provisions and aims to standardize and harmonize GST refund procedures. Therefore, a standard form has been created for submitting return requests. The appeal process can be completed online in a timely manner.

GST Refund Process

To process a claim for compensation under the GST regime, the following procedure must be followed. Visit the GSTN website and log in to the GSTN portal to fill the refund form.

If the application is submitted electronically, the applicant will receive an email or text message with a confirmation number.
The cash and return book will be corrected and the 'carry forward input tax credit' will be automatically reduced.
The authorities will process the return request and the documents submitted within 30 days of submitting the return.
The concept of “Unjust enrichment” has been delved into and explored by authorities. If the application does not meet the requirements, the money will be returned to the Consumer Protection Fund (CWF). ^[1]The Consumer Protection Fund (CPF) is more like a savings account where money collected from fines and penalties imposed on businesses for unfair practices is kept. This money is then used to compensate consumers who have suffered because of such unfair practices.
If an individual's requested refund exceeds the predetermined refund, a pre-examination will be conducted before the refund is determined. The GST refund will be electronically transferred to the applicant's account via NEFT, RTGS, or ECS.
Individuals can submit their refund request for any period (monthly, quarterly, half-yearly or annually). However, if the refund amount is less than INR 1000 then the person will not be eligible for refund.^[2]

When can the GST refund be claimed?

The following are the examples of when taxpayers can claim their GST Refund:

When additional tax is paid or deposited due to errors or defects;
In case of accumulated ITC due to exports / deemed exports of goods or services;
IGST paid on export of services (with payment of tax)
For purchases made by UN agencies or embassies;
There is an Input Tax Credit (ITC) accumulation because of output tax being lower than the inward tax (i.e. tax paid for procurement of raw materials) know as inverted duty structure.;
On finalization of the provisional assessment, assessment or appeal or any other order, where amount was deposited and
International tourists can claim a tax refund while leaving the country ^{[2] [3].}

Time limit for claiming the GST refund

The timeframe for applying for a refund application is within two years from the relevant date, which is as follows:

Reason for claiming GST Refund	Relevant Date
Excess payment of GST	Date of payment
Export or deemed export of goods or services	Date of dispatch/loading/passing the frontier
ITC accumulates due to zero-rated supplies or export of goods or services.	Date of issue of invoice or the date of payment received as the case may be.
Finalization of provisional assessment	Date on which tax is adjusted

How to claim GST refund?

The application for a GST refund must be submitted using form RFD 01 within two years from the relevant date. The form also requires approval from a Chartered Accountant. There are also numerous online tools to calculate GST refund.

How to track GST refund status online?

Post filing for refund using RFD-01, concerned individuals can track their GST refund status online in the following ways.

Post-Login Tracking - Here you need to check "Track Application Status" simply by logging into GST Portal and then go to the Services tab. After reaching the services tab, you have to choose a year and confirm a bank account where you can get accurate information about the status.
Pre-Login Tracking - Here, there is no need to log in to the GST portal to get tracking related data. They have to visit the GST portal and click on 'Track Application Status' and enter the ARN to get refund status.
Refund Status Tracking for IGST Paid on Exports of Goods - The login process to select fiscal year and quarterly files must be completed in this section. After that, the invoice information must be checked and entered, thus providing all the necessary information. [^4]

What are the 3 stages of GST refund status?

The three stages of GST refund status are as follows,

Step 1: Submit a refund request: When a taxpayer submits a refund request, the GST refund begins. This can be done electronically through the GST portal. The application must include all relevant information, such as the amount of the refund requested, the tax year from which the refund is requested, and all necessary supporting documents.

Step 2: Processing your refund application: The GST authorities process the refund request in the second stage of the process. The authorities will process the request and additional materials sent by the taxpayer. Authorities may contact the taxpayer if they require clarification or additional information. The refund amount is transferred to the taxpayer's bank account after the refund is processed and approved.

Step 3: Refund Confirmed: Approval of the refund by the GST authorities is the third and final stage of the GST refund process. The authorities will now issue an order confirming repayment of the claimed amount. The money is then transferred back to the taxpayer's bank account. Taxpayers can track the progress of their GST refund application at all these points by logging into the GST portal. The portal regularly updates the refund status, including any taxpayers for additional information or clarification.

Conclusion

Imagine your business as a big puzzle, and sometimes you accidentally put in extra pieces i.e., taxes. To get those extra pieces back - GST refund, you need to follow the puzzle's instructions (tax rules). Collect your evidence (invoices), prove the extras, and the puzzle will be complete with your refund piece! On the other hand, delays in return processing can also harm manufacturers' working capital requirements and cash flow. As a result, the GST application, claim, payment, and refund process has been developed online to ensure speedy delivery and smooth operation. With this easy access, manufacturers, sellers and exporters can file their GST refund and track GST refund status from the comfort of their computer screen.

Frequently Asked Questions

Q1: Who can claim a refund in GST?

GST refund can be claimed by registered taxpayers as well as the unregistered taxpayers like international tourists can claim a tax refund while leaving the country.

Q2: What are the documents required for a GST refund?

The following documentary evidence is required to claim a refund under GST by registered tax payer.

Print out of GSTRFD-01 A & ARN print out.
GSTR-3B/ GSTR-3 print out of a particular month.
Statement-2 as per Rule 89 (2) (c).
Undertaking by claimant as per para 2.0 of circular 24/2017.
Export & Input services Invoices.
BRC/FIRC. BRC or Bank Realisation Certificate acts as a proof that an exporter has received payment from the particular importer for the respective exported goods. FIRC is a Foreign Inward Remittance Certificate that acts as a proof of all the inward remittances made to India.
Undertaking of no prosecution Rule 91(1)[5]

Q3: What is GST refund eligibility?

You can claim a GST refund in the following situations, when additional tax is paid or deposited due to errors or omissions. When dealers and deemed export goods or services are subject to refund or refund. Refunds can also be made for purchases made by UN agencies or embassies.

Kotak Mahindra Bank is an authorized bank to collect Goods & Services Tax (GST) through its digital integration with the GST portal. Individual and corporate customers can make end-to-end tax payments on this portal simply by selecting Kotak Net Banking as a payment option or pay using Credit Card/Debit Card or UPI of any bank via the Kotak Payment Gateway. Customers can also make GST payments through cash, cheque or DD by selecting “Over-the-Counter” mode of payment while creating a challan on the GSTN portal.