Refunds

A tax payer if eligible to claim GST Refund, then the tax payer can apply for refund under any of the following categories:

1. Refund of Excess Balance in Electronic Cash Ledger
Reasons for excess balance in electronic Cash Ledger
(1)  Wrong tax amounts paid by mistake.
(2)  Payment under wrong head
(3)  TDS / TCS Deposited under wrong head.

2. Refund of ITC on Export of Goods & Services without Payment of Tax
(1) For any export of goods / services the rate of GST is considered as Zero rated. Therefore, GST is not levied on such supply
(2) Since there is no tax liability the GST input from purchases is accumulated and the tax payer can claim refund on this accumulated input
(3) The taxpayer has to obtain LUT (Letter of undertaking) and the LUT number has to be incorporated on the shipping bill.
(4) Formula for Calculating refund Refund Amount  (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) × Net ITC ÷ Adjusted Total Turnover

3. On account of supplies made to SEZ unit/ SEZ developer (without payment of tax)
(1) Any supply made to the SEZ unit / SEZ developer are considered as an exports and imports.
(2) The supplies to the SEZ can be made in the below 2 ways:
(a) Supply under bond or LUT without payment of IGST and claim credit of ITC.
(b) Supply on payment of IGST and claim refund of taxes paid.
(3) Therefore, any supply made to the SEZ unit is treated as export and the rate of GST is Zero percent. Since the tax liability is zero and the accumulated inputs from the purchases can be claimed as refund.

4. Refund on account of Supplies to SEZ unit/ SEZ Developer (with payment of tax)
(1) Any supply made to the SEZ unit / SEZ developer are considered as an exports and imports.
(2) The supplies to the SEZ can be made in the below 2 ways:
(a) Supply under bond or LUT without payment of IGST and claim credit of ITC; or
(b) Supply on payment of IGST and claim refund of taxes paid.
(3) Therefore, any supply made to the SEZ unit is treated as an export and the taxpayer can make the payment at applicable rate of GST. After filing the GST Refund for the relevant tax period, the taxpayer can apply for GST refund through Form GST RFD-01.

5. Refund on account of ITC accumulated due to Inverted Tax Structure:
(1) Inverted Tax Structure’ refers to a situation where the rate of tax on inputs purchased is more than the rate of tax on outward supplies. That means Inverted Duty Structure arises when tax paid on Inward Supplies is higher than tax payable on outward supplies.
(2) Since the input from the purchases will be always higher than the tax liability, there will be accumulated GST input.
(3) The accumulated GST input is eligible to claim refund. The taxpayer can apply for GST refund through Form GST RFD-01.
(4) Formula for calculating GST Refund is Maximum Refund Amount = {(Turnover of inverted rated supply of goods and services) x Net ITC ÷ Adjusted Total Turnover} – tax payable on such inverted rated supply of goods and services.

6. On account of Refund by Recipient of deemed export:
As per notification no Notification no. 48/2017-Central Tax dated 18.10.2017 Deemed Exports means:

• Under Deemed supply the option to apply for refund vests with both supplier or recipient. But the application can be filed by either supplier or recipient.
• Under this category, The taxpayer has to pay GST against the deemed export supplies to the supplier.
• The supplier has to file invoices under deemed export category in Form GSTR-1 for the relevant tax period.
• Upon successful filing of GSTR-1 by the supplier the taxpayer can claim refund by filing refund application in Form GST RFD-01.

 
7. On account of Refund by Supplier of deemed export
As per notification no Notification no. 48/2017-Central Tax dated 18.10.2017 Deemed Exports means:

• Under Deemed supply the option to apply for refund vests with both supplier or recipient. But the application can be filed by either supplier or  recipient.
•  Under this category, The buyer is not required to pay GST against the deemed export supplies to the supplier.
• The supplier has to file invoices under deemed export category in Form GSTR-1 for the relevant tax period.
• Upon successful filing of GSTR-1 by the supplier the taxpayer can claim refund by filing refund application in Form GST RFD-01.

 
8. Export of services with payment of tax

• For any export of services, the rate of GST is considered as Zero rated. Therefore, GST is not levied on such supply.
• The taxpayer has an option to make the payment at the applicable rate of GST by setting off input tax credit.
• The tax amount paid is eligible for applying GST refund, and the taxpayer can apply refund through Form RFD-01.

9. Excess payment of tax

• If the tax payer has made an excess payment of tax, then the tax payer is eligible to claim the excess amount of tax paid.
• Situations where the excess payment of tax can be made are
  1. 1. Wrong GST Head
     2. Erroneous calculation of tax amount
     3. Incorrect GSTIN
     4. Advance tax payment
     5. Refund for Casual Tax Payers
     6. Refund of Late fees, interests & penalties