How to Calculate and Claim GST Refund Process

Amaey Anand

Senior Writer

GST Refund Process

GST refunds might sound like good news, but the process is complicated and confusing, especially if you are handling GST and refunds for the first time.

An individual could claim a GST refund of tax paid more than what he owed as GST liability to the government. The government has standardized the process and procedure to calculate GST refund and claim it to avoid confusion. 

Looking for GST Software? Check out SoftwareSuggest’s list of the best GST Software solutions.

How well do you know this standardized procedure for refund claims and calculations? This article will highlight when to calculate and claim a GST refund. We’ll also discuss how do you calculate a GST refund, the time limit, and the documents required to claim a GST refund.

What Is GST Refund?

GST refund is the amount of money that can be claimed by an individual who has paid excess tax. The procedure is entirely standardized and can be performed online.

How To Calculate GST Refund?

To calculate the GST refund, you only need to subtract the excess tax paid on the relevant date from the total you were supposed to pay. With the calculation, you can get the excess amount you paid. After you know the amount, you can claim it within the refund processing timeline based on the type of the claim.

Let’s understand with an example.

For September month, Mr. X’s GST due is Rs 50000. Mr. X, on the other hand, made a GST payment of Rs 5 lakh by error. 

Mr. X has now paid an extra GST contribution of Rs 4.5 lakh, which he can claim as a refund. The refund for the supply of goods must be collected within two years after the payment was made. However, according to GST rules, you will receive in Form GST RFD-O3 if there’s any discrepancy in the refund application. But, if the verification is successful, you will receive Form RFD-O2 acknowledgment.

The online process has made the GST refund process organized and easier. If you follow the process correctly, you can directly receive the refund under GST to your bank account. 

How To Claim A GST Refund?

The ultimate aim is not just to calculate GST refund. You should know how to claim it. To claim the refund, you have to submit the RFD-01 form online. The GST portal is available for this process. 

  • Step 1: Visit the GSTN portal and find the RFD-01 application
  • Step 2: Calculate the GST refund amount before filling out the application.
  • Step 3: You will receive an SMS or email with a unique acknowledgment number.
  • Step 4: Check the reduction in carrying forward ITC. Calculate the GST refund and check whether the amount reduced is coherent.
  • Step 5: The authorities will check and validate the refund within 30 days of submitting the application
  • Step 6: The authorities will strictly review for unjust enrichment. The refund gets transferred to CWF – Consumer Welfare Fund if found unqualified.
  • Step 7: The authorities will calculate the GST refund, and if the refund claimed by you is higher than the determined GST refund, pre-audit processes will start.
  • Step 8: Upon clarification, you will receive the refund via ECS, RTGS, or NEFT.

You need to calculate the GST refund at the quarter-end. If you are eligible, you can apply for a refund at the end of every quarter.

When To Claim A GST Refund?

Not every individual can claim a GST refund randomly. There are certain cases and criteria where one can receive a refund. In general, the individual might pay in excess due to any mistake during payment calculation or any omission. This additional payment is claimable as a refund.

  1. Exports include deemed exports too. The individual can claim a GST refund if the cumulative balance arises out of the input credit of the exports. A refund is also possible under a claim of rebate.
  2. Refund is valid in case of inadvertent mistake, which led to the individual paying excess tax.
  3. The credit might accumulate if output tax becomes nil or the individual becomes exempted from any tax. In such a case, the individual can claim a GST refund to receive the credit.
  4. After the provisional assessment, one might become eligible for a refund.
  5. Any amount paid as a deposit by a respondent would be refunded to the appellant, who can claim a GST refund.
  6. Sometimes, the individual might be eligible for a refund after an investigation.
  7. In case of goods or services purchased by one of the UN bodies or any foreign embassies, you can claim a GST refund.
  8. Calculate a GST refund by subtracting the output tax from the input tax. If the output tax is less, you can claim a GST refund.
  9. You can claim a GST refund if the suppliers receive credits or discounts via credit note issuance.
  10. GST by international tourists

Refund of ITC

ITC – Input Tax Credit: One can claim a GST refund on ITC under the following criteria.

  1. When the goods/ services are GST exempted, the unutilized ITC is refundable
  2. If the output tax is lower than the input tax rate, you can claim a GST refund on ITC.
  3. The ITC is not completely utilized against output tax during a partial reverse charge. In such cases, a GST refund is valid.

What Is The Time Limit To Claim A GST Refund?

 You can claim a GST refund within two years.  But when do those two years start? Let’s look:

  1. The refund threshold for goods exported via sea or air is two years after the cargo leaves the country.
  2. The refund threshold for goods transported via road vehicles is two years after the goods cross the country’s land frontier.
  3. If good transportation occurs via post, it is two years before the goods get dispatched.
  4. If the services offered are performed after receiving the payment, it is two days from the date on the invoice.
  5. In the case of unutilized excess ITC, it is two years from the financial year’s end.
  6. For goods for deemed exports, the refund time threshold is two years from the return filing date.
  7. For tax after provisional assessment, you can claim a GST refund within two years from the date of the tax adjustment.

What Are The Documents Required For A GST Refund?

To seek a GST refund, the applicant must provide the following documents:

Documents Required For A GST Refund

  1. Refund of GST on Exports

    Whenever the applicant submits a refund claim for exports or supplies to an SEZ, the individual must produce the relevant invoice for the transaction. Together with the invoice, a declaration stating the date and number of shipping documents or bills of export and the date and number of the applicable export invoices is required in cases where the refund is due to the export of goods.

    In the case of a GST refund due to the export of services, the applicable bank realization certificates confirming that payment was received in foreign exchange must be supplied simultaneously with the tax invoices.

  2. GST Refund for SEZ Supply

    If a supplier requests a GST refund for an SEZ unit, the applicant must provide an endorsement from the Appropriate Officer proving receipt of such goods/services in the SEZ with the Tax Invoice.

    Furthermore, the applicant must provide a statement from the SEZ units indicating that the applicant has yet to obtain tax input credit from the supplier.

  3. Accumulated Input Tax Credit GST Refund

    If the applicant requests just for the accrued input tax credits, the GST refund rules need only a statement containing billing information to be submitted.

    It is crucial to note that in the case of the provision of services for the development of a complex, buildings, civil structure, or a part thereof, along with a complex or building that is being sold to a buyer, totally or partly, no reimbursement of the unutilized input tax credit would be allowed.

    Furthermore, no refund of unutilized CGST and IGST input tax credits will be authorized when the credit has accrued due to the GST tax rate on inputs being greater than the rate of tax on output supply.

  4. GST Refund on Account of Order

    In case of a claim of GST returns on behalf of any order or judgment of the appellate authority or court, the identification numbers of the order giving rise to a refund must be submitted along with the appropriate tax invoices.

Final Words

As mentioned, the method you use to calculate GST refund is crucial. Certain unique scenarios would need a different type of calculation. Wrongful refund claims can lead to regrettable scenarios. Thus, it is important to double-check the process. 

Besides, hiring a professional legal service provider to deal with GST calculation, refund, and other processes is best if you run a large business. This service would allow you to relax and concentrate on your business.

Frequently Asked Questions

   

The GST statutes include basic provisions for requesting a refund. Every claim must be submitted online in a standardized form and acknowledged (if complete in all aspects) within 14 days. The claim for reimbursement of quantity lying in the credit line of the cash record can be made inside the monthly data.

Suppose goods exported from India are subject to excise duty. In that case, the accumulated unutilized ITC will not be available for GST refund if the provider of goods has requested a duty drawback on excise tax paid or a refund of IGST payable on such supply.

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