Author: admin_gst

Para 6 – Draft-Bills-Reports – Business Processes for GST on Refund Process – Report on – Business Processes for GST on Refund Process – [August 2015] – Para 6 – RECEIPT OF REFUND APPLICATION AND PROCEDURE FOR GENERATING PROOF OF RECEIPT OF APPLICATION FOR REFUND: 6.0 It is recommended that the State Tax authorities shall deal with the SGST refund and Central Tax authorities shall deal with refund of CGST and IGST. The following procedure is proposed in this regard: i) Applicant may be given the option of filing refund application either through the GSTN portal or through the respective State/Central Tax portal. Filing through GSTN portal may be beneficial for those applicants whose refund relates to CGST / IGST as well as SGST or the refu

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NUMBER OF COPIES OF APPLICATIONS TO BE FILED – Para 7 – Draft-Bills-Reports – Business Processes for GST on Refund Process – Report on – Business Processes for GST on Refund Process – [August 2015] –

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Para 8 – Draft-Bills-Reports – Business Processes for GST on Refund Process – Report on – Business Processes for GST on Refund Process – [August 2015] – Para 8 – REQUIREMENT FOR TAXPAYER TO KEEP A COPY OF REFUND APPLICATION FOR THE PRESCRIBED PERIOD: 8.0 Since the application for refund is expected to be filed electronically, the application form should have a print option along with the option for the applicant to download the same so that he can store the same for future reference and record.

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Para 3 – Draft-Bills-Reports – Business Processes for GST on Refund Process – Report on – Business Processes for GST on Refund Process – [August 2015] – Para 3 – REFUND FORMS: 3.0 The form should be simple to fill, easy to understand and more importantly, in the context of the technological world, it should be in electronic format. The forms for Refund Claim, Refund order and Reduction / Adjustment summary are enclosed as Annexure -IV to VII to this document. – Statutory Provisions, Acts, Rules

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Para 4 – Draft-Bills-Reports – Business Processes for GST on Refund Process – Report on – Business Processes for GST on Refund Process – [August 2015] – Para 4 – TIME PERIOD FOR FILING OF REFUND AND RELEVANT DATE: 4.0. It is recommended that a period of one year from the relevant date may be allowed for filing of refund application. Relevant date for filing of each kind of refund needs to be defined separately. The following dates are recommended as relevant dates for different type of refund cases: i) Date of payment of GST when the refund arises on account of excess payment of GST due to mistake or inadvertence. ii) Date on which proper officer under the Custom Act gives an order for export known as LET EXPORT ORDER for the purpose of re

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der or order relating to completion of investigation when refund arises on account of payment of GST during investigation, etc. when no/less liability arose at the time of finalization of investigation proceedings or issuance of adjudication order. vii) Date of providing of service (normally the date of invoice) where refund arises on account of accumulated credit of GST in case of a liability to pay service tax in partial reverse charge cases. viii) Date of payment of GST for refund arising out of payment of GST on petroleum products, etc. to Embassies or UN bodies or to CSD canteens, etc. on the basis of applications filed by such persons. ix) Last day of the financial year in case of refund of accumulated ITC on account of inverted duty

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Para 5 – Draft-Bills-Reports – Business Processes for GST on Refund Process – Report on – Business Processes for GST on Refund Process – [August 2015] – Para 5 – SUPPORTING DCOUMENTS: 5.0 Documents evidencing tax payments required to be enclosed with the refund application should be minimal but adequate so that both the taxpayer and tax authority find it easy to deal with the application. Normally following documents are required to establish the rightful claim of refund: i) Copy of TR-6 / GAR-7/ PLA/copy of return evidencing payment of duty. It is recommended that these forms may not be called for as in the proposed GST scenario payment of duty will be in electronic mode and the same will be easily visible to the refund sanctioning author

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f the invoices or a statement containing details of quantity along with the refund application. Documents evidencing export. In the proposed GST scenario it is recommended that the ICEGATE and GSTN would be inter linked, and therefore these documents can be verified on line and therefore can be dispensed with. iii) Documents evidencing that the tax burden has not been passed on to the buyer. Since GST is an Indirect tax, there will be a rebuttable presumption that the tax has been passed on to the ultimate consumer. Therefore there is a need for establishing that principle of unjust enrichment does not apply to the refund claim. It is recommended that a Chartered Accountant s Certificate certifying the fact of non-passing of the GST burden

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Para 2 (J) – Draft-Bills-Reports – Business Processes for GST on Refund Process – Report on – Business Processes for GST on Refund Process – [August 2015] – Para 2 (J) – 2(J) TAX REFUND FOR INTERNATIONAL TOURISTS: Tax Refund for International Tourist (TRT) scheme provides an opportunity to the foreign tourists to purchase goods during their stay in any country on payment of GST and obtain refund of the GST so paid, at the time of exit from the country. Nearly 52 countries have adopted such kind

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Para 2 (I) – Draft-Bills-Reports – Business Processes for GST on Refund Process – Report on – Business Processes for GST on Refund Process – [August 2015] – Para 2 (I) – 2(I) REFUND ON ACCOUNT OF YEAR END OR VOLUME BASED INCENTIVES PROVIDED BY THE SUPPLIER THROUGH C REDIT NOTES: It is noted that suppliers are allowing year end or volume based discounts through credit notes. Such practice is being misused by the trade where the downstream dealers show negative value-additions. Some States have placed restrictions on such ITC. It is felt that the GST Law may provide for suitable provisions in this regard as provisions for such discounts is a trade practice and will have to be permitted in the GST regime. The following procedure is recommende

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Para 2 (G) – Draft-Bills-Reports – Business Processes for GST on Refund Process – Report on – Business Processes for GST on Refund Process – [August 2015] – Para 2 (G) – 2 (G) TAX CREDIT ON INPUTS USED FOR MANUFACTURING /GENERATION /PRODUCTION /CREATION OF TAX FREE SUPPLIES OR NON-GST SUPPLIES: i) There would be certain goods or services which may be either exempted or NIL rated in GST regime. Further there may be certain goods or services which may not be brought under GST regime. Persons supplying such exempted/nil rated/non-GST goods or services would be receiving goods or services as their input supplies after payment of GST. ii) The issue, whether such taxpayers are entitled to cash refund of the GST paid by them in respect of such in

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GST Law may provide that the suppliers of exempted / NIL rated / non GST goods or services would not be entitled to the ITC of GST paid on inputs (including input services or capital goods) received by them and consequently for refund of GST paid by them. In case of mixed supplies, ITC may be allowed proportionately. vi) The tax credit on the inputs used for supply of exempted/ NIL rated / non GST goods or services should be treated as ineligible input tax credit and there should be an appropriate provision in the return to provide the related invoice details. vii) In addition to ineligible input tax credit arising from inputs used for supply of exempted / Nil rated / non-GST goods or services, there may be other types of ineligible input t

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Para 2 (H) – Draft-Bills-Reports – Business Processes for GST on Refund Process – Report on – Business Processes for GST on Refund Process – [August 2015] – Para 2 (H) – 2(H) REFUND OF CARRY FORWARD INPUT TAX CREDIT: i) As stated earlier, ITC is allowed to remove cascading and under modern VAT laws, tax is charged on value addition only and tax is not charged on tax. It is for this reason that the ultimate consumer is liable to bear the tax burden. ii) It is noted that the ITC may accumulate on account of the following reasons : a) Inverted Duty Structure i.e. GST on output supplies is less than the GST on the input supplies; b) Stock accumulation; c) Capital goods; and d) Partial Reverse charge mechanism for certain services. iii) As rega

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edit has been matched from the purchase and sales statements filed along with monthly returns. The refund would be granted on submission of application. It may be mentioned, however, that presently the Centre does not grant refund in such cases. vi) Two options i.e. blocking the utilization of input tax credit claimed as refund at the time of submission of application for refund itself or debiting the input tax credit account/cash ledger subject to the amount available in either account at the time of issuance of sanction order of refund were discussed. It is recommended that the first option should be adopted. Suitable linkage between the refund application and blocking of the carry forward input tax credit in the return/cash ledger should

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Para 2 (F) – Draft-Bills-Reports – Business Processes for GST on Refund Process – Report on – Business Processes for GST on Refund Process – [August 2015] – Para 2 (F) – 2(F) REFUND FOR TAX PAYMENT ON PURCHASE BY UN BODIES, SUPPLIES TO CSD CANTEENS, PARA MILITARY FORCES CANTEENS, ETC.: i) Presently the UN bodies are eligible for refund of taxes paid by them at the time of purchases made by them from the market. GST Law may provide for similar provision and in such a case, the following process for grant of refund is recommended: a) Refund on purchases by UN Bodies may be granted from only one office each of both the tax administrations within one State. b) UN Bodies may be assigned a unique identification number (ID) the structure of which

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should be specifically marked in the purchase statement or may not be included in the purchase statement. h) The net claim will be related to GST paid on total purchases minus GST paid on ineligible purchases. i) The IT system will carry out the matching with the sales statements of the counter party suppliers. j) The matched and claimed to be eligible invoices will be seen by the jurisdictional authority to verify that none of the ineligible purchases have been included in the refund claim. k) The refund may be granted based on the matching and the limited manual verification. l) There might be situations when the supplier does not declare the supply in his monthly return. In such a case, unmatched invoices will get marked by the IT syste

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Para 2 (D) – Draft-Bills-Reports – Business Processes for GST on Refund Process – Report on – Business Processes for GST on Refund Process – [August 2015] – Para 2 (D) – 2 (D) REFUND OF PRE – DEPOSIT FOR FILING APPEAL INCLUDING REFUND ARISING IN PURSUANCE OF AN APPELLATE AUTHORITY S ORDER: Refund arising in pursuance of appellate authority s order is another area that has been subject of judicial scrutiny and strictures. The following process is recommended in order to make this process streamlined, efficient and in line with the judicial decisions on the matter: i) Looking at the policy objective of making the refund process hassle free, it is recommended that the taxpayer may file a simple refund application along with a Chartered Accoun

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Para 2 (E) – Draft-Bills-Reports – Business Processes for GST on Refund Process – Report on – Business Processes for GST on Refund Process – [August 2015] – Para 2 (E) – 2(E) PAYMENT OF DUTY/TAX DURING INVESTIGATION BUT NO / LESS LIABILITY ARISES AT THE TIME OF FINALIZATION OF INVESTIGATION / ADJUDIACTION : Presently the Central Law (State Laws do not have similar provision) does not debar suo-motto payments during investigation / audit without issuance of a formal show cause notice / demand. If the GST Law does not debar such payments during investigation / audit process and ultimately no / less demand arises vis-à-vis amount already paid, then refund of such amount may be handled as per the procedure given below: i) A separate mec

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vestigation, etc. iv) Looking at the policy objective of making the refund process hassle free, it is recommended that the taxpayer may file a simple refund application along with a Chartered Accountant s Certificate certifying the fact of non-passing of the GST burden by him, being claimed as refund. GST Law Drafting Committee may prescribe a threshold amount below which self certification (instead of CA Certificate) would be sufficient. v) However, as every adjudication order can potentially be appealed against, the model GST Law may provide for a time limit after which only the refund can be sanctioned either by cash or by adjustment order at the option of the tax payer by the jurisdictional officers. This time limit should be concurrent

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Para 2 (B) – Draft-Bills-Reports – Business Processes for GST on Refund Process – Report on – Business Processes for GST on Refund Process – [August 2015] – Para 2 (B) – 2 (B) EXPORT (INCLUDING DEEMED EXPORT) OF GOODS / SERVICES UNDER CLAIM OF REBATE OR REFUND OF ACCUMULATED CREDIT OF TAX WHEN GOODS/SERVICES ARE EXPORTED: The treatment for export of goods and services and that of deemed export would be different under GST regime because of their inherent nature. Therefore these are being discussed separately as follows: EXPORT OF GOODS: i) Presently under the Central Law, every exporter has three options available for neutralization of taxes paid on inputs used for export goods or taxes paid on finished goods exported by him which are delineated hereunder: a) Obtaining non duty paid inputs and exporting final product without payment of duty. b) Obtaining duty paid inputs and claiming refund of the same at the time of export of the finished goods without payment of duty. c) Obtaining d

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ple and efficient so that exporters do not experience any hassles while claiming refund of taxes. For this it is essential to devise a system based verification mechanism so that human intervention is reduced to the minimum. iii) It is recommended that the first option mentioned above i.e. option to procure duty free inputs for exported goods should not be available in the GST regime. This would obviate the requirement of submission of statutory form and the supplier of goods to the actual exporter would be required to pay the GST and will not be required to comply with various formalities presently required for making tax free supplies. iv) It is further recommended that other two options may be made available to the exporter in the proposed GST regime. It is recommended that GST Law drafting Committee may provide for the provision of rebate and the legality of the same will be examined at the time of vetting of the GST law by the Law Ministry. v) Since the process for payment of refu

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linkage has to be established to verify IGST paid at the time of import of goods / services. e) It is also noted that, as per IGST Model, there is a requirement for online filing of invoice wise sale/purchase details by the taxpayers along with the monthly returns. These details can be linked with the Customs data (for export cases) available with ICEGATE. f) Normally for export verification the following documents are sought from the applicant: i) Shipping Bill (Export Promotion copy); ii) Mate s Receipt/Transporter s Challan (in case of export by road); iii) Export invoice; iv) Packing list; v) Bill of Lading/ Airway Bill; vi) Bank Realization Certificate (BRC). g) Since it is proposed to establish linkage between ICEGATE and GSTN, therefore shipping bill, which includes relevant details from the export invoice and packing list, can be verified online and there would not be any need for the exporter to submit the same. Further, Mate s Receipt and Bill of Lading are the crucial docum

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In case of any short receipt of export receipts, necessary action for recovery of proportionate refunded amount may be taken accordingly. h) BRC, however, may be verified at the time of exports itself if the payment has already been received in advance. It is also recommended that e-BRC module may be integrated in the Refund process under GST. i) The time limit for filing of refund application is normally linked with the date of export and it is proposed that this time limit should be fixed at one year from the date of export. This date is the date on which the proper officer under the Customs Act gives an order for export of goods commonly known as Let Export Order (LEO). This date can also be verified online in view of the proposed linkage between ICEGATE and GSTN. j) Once the export is established, verification of the duty paid on the final products at the time of export is required to be carried out. For this, normally, copy of challans/ invoices evidencing duty payment are sought

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posed GST regime, the GST paid character of inputs (including input services) can be established online (as the purchase invoices are required to be filed along with the monthly return) and the refund of input tax credit on inputs (including input services) can be sanctioned once the input tax credit has been matched from the purchase and sale statements filed by the exporter and supplier respectively and there is no need for separate submission of these documents. As regards utilization of the inputs for exports, a simple formula can be adopted that will provide for proportionate credit based on export turnover divided by total turnover. Moreover, a declaration can be obtained from the exporter regarding utilization of inputs in the exported goods. EXPORT OF SERVICES: i) It is noted that in case of export of services there are no custom documents that can substantiate the occurrence of event of export as no shipping bill is required to be filed. Thus invoice and Bank Realization Certi

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in Chapter 8 of the Foreign Trade Policy. Supplier of domestically produced duty paid goods when supplied to EOUs / SEZs / Projects under International Competitive Bidding (ICB) / Mega Power Plants/World Bank Funded Projects can seek refund of terminal excise duty as also drawback of the duty paid on the inputs used in manufacture of such goods. However such refund is not permissible for VAT paid on such domestically supplied goods. ii) It is recommended that the deemed export need to be treated on equal footing as export and the similar provision as detailed above for actual exports of goods or services would be applicable except the following: a) The supplier of final goods, in the course of deemed export, will pay the IGST on his supplies and can claim refund, only if, the IGST amount has not collected from the recipient. It is also required to be verified that the recipient has not availed the input tax credit in respect of such supplies. b) The supplier may file a simple refund ap

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eing followed by the States. GENERAL: i) It was suggested that as a thumb rule, up to 90% of the refund claimed by the taxpayer may be sanctioned automatically by the system. The balance amount of refund may be granted after completion of verification of documents / accounts to be done at the end of the financial year and to be completed within a period of three months. The issue was discussed and it is recommended that partial refund may not be allowed and entire refund claim may be sanctioned within the time limit laid down in the GST Law. ii) It was noted that there may be certain goods on which Customs Export Duty may be leviable. It is recommended that in such cases refund of ITC of GST paid on inputs (including input services) used for such exported goods may not be admissible. iii) Requirement of BRC for sanction of refund in respect of export of services and as a post facto verification in case of export of goods may be provided in the GST Law. iv) It was noted that the exports

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Para 2 (C) – Draft-Bills-Reports – Business Processes for GST on Refund Process – Report on – Business Processes for GST on Refund Process – [August 2015] – Para 2 (C) – 2 (C) FINALIZATION OF PROVISIONAL ASSESSMENT: As discussed in Para No. (I) below, the issues relating to provisional assessment being presently followed by Central Tax Authorities would be handled by the system of issuance of debit and credit notes, therefore refund may not arise in such cases. The process has been delineated here under, if the GST Law provides for continuance of the system of provisional assessment: i) In the proposed GST regime the returns of the taxpayer will be electronically filed. In the return itself there should be a field for indicating whether th

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ll also mention the amount that the taxpayer is required to pay or is eligible for refund. v) The refund would be granted only if the incidence of GST paid by him has not been passed on to the consumer (the concept of unjust enrichment). This issue would be examined by the assessing officer at the time of finalization of assessment. vi) The model GST Law may provide for appropriate provisions relating to the principle of unjust enrichment. vii) For satisfying the requirement of unjust enrichment, the taxpayer would be required to submit a Chartered Accountant s Certificate certifying the fact of non-passing of the GST burden by the taxpayer, being claimed as refund. GST Law Drafting Committee may prescribe a threshold amount below which sel

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Para 2 (A) – Draft-Bills-Reports – Business Processes for GST on Refund Process – Report on – Business Processes for GST on Refund Process – [August 2015] – Para 2 (A) – 2 (A) EXCESS PAYMENT OF TAX DUE TO MISTAKE OR INADVERTENTCE: i) As the heading suggests, it refers to the situations where the tax payer has made excess payment of tax either by mistake or by inadvertence resulting in more payment of tax than due to the Government. Since the tax that has been paid is in excess, which was actually not required to be paid, the same should be refunded to the taxpayer. ii) Such excess payment may be on account of:- a) wrong mention of nature of tax (CGST / SGST / IGST), b) wrong mention of GSTIN, or c) wrong mention of tax amount. iii) In firs

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ther the payment is to be made tax period wise or a system of Personal Ledger Account (PLA) is to be used. Maharashtra has suggested that Kerala model of return cum challan may also be examined by the GST Law Drafting Committee / Payment Committee. vi) In the third situation i.e. where the amount has been mentioned wrongly, the refund of excess amount of tax, at the option of the taxpayer, would either be automatically carried forward for adjustment against future tax liabilities or be refunded on submission of application (return itself can be treated as a refund application) by the taxpayer. The automatic carry forward would be allowed if the excess payment was made against a return and not against any other liability. The GST Law may pro

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Para 2 – Draft-Bills-Reports – Business Processes for GST on Refund Process – Report on – Business Processes for GST on Refund Process – [August 2015] – Para 2 – SITUATIONS WHERE REFUNDS WOULD ARISE: 2.0 In the taxation administration, refund refers to any amount that is due to the tax payer from the tax administration. In the present taxation system it is considered as a strained area, both for the taxpayer and the tax administration. So in order to establish an effective and efficient tax administration system it is essential that issues on which refund arises ought to be kept at minimum and be clearly defined in the law. Since GST is going to subsume many of the existing taxation laws such as Central Excise, Service Tax, VAT, CST, etc.,

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Para 1 – Draft-Bills-Reports – Business Processes for GST on Refund Process – Report on – Business Processes for GST on Refund Process – [August 2015] – Para 1 – REPORT OF THE JOINT COMMITTEE ON BUSINESS PROCESSES FOR GST ON REFUND PROCESSES Empowered Committee of State Finance Ministers New Delhi August, 2015 REPORT OF THE JOINT COMMITTEE ON BUSINESS PROCESSES FOR GST ON REFUND PROCESSES IN GST REGIME INTRODUCTION: 1.0 During the Empowered Committee meeting held on 10th March, 2014, it was decided that a Joint Committee under the co-convenership of the Additional Secretary (Revenue), Government of India and the Member Secretary, Empowered Committee should be constituted to look into the Report of the SubGroup-I on Business Processes for G

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ber, 2014 (Annexure-II). Shri Sanjeev Khirwar, Commissioner, Trade Taxes, Delhi was co-opted as a member of the Sub-Committee. 1.2 The Sub-Committee examined the present practices prevalent in the Central and the State VAT laws and also noted the proposed structure for verifications, etc. envisaged under the IGST Model. The Sub-Committee submitted its Report on 28th January, 2015. The Report of the Sub-Committee was considered by the Joint Committee on Business Processes for GST in its meeting held on 2nd February, 2015 and 3rd February, 2015. The list of the participants of the last meeting of the Joint Committee on Business Processes is appended at Annexure-III. The Joint Committee broadly agreed with the recommendations of the Sub-Commit

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Question 20 – Draft-Bills-Reports – Frequently Asked Questions (FAQ) GST – FAQ [OLD] on Goods and Services Tax (GST) – (December 2015) – Question 20 – Q 20: How will the rules for administration of CGST and SGST be framed? Ans: The Joint Working Group, as mentioned above, has also been entrusted the task of preparing draft legislation for CGST, a suitable Model Legislation for SGST and rules and procedures for CGST and SGST. Simultaneous steps have also been initiated for drafting of legislatio

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Question 17 – Draft-Bills-Reports – Frequently Asked Questions (FAQ) GST – FAQ [OLD] on Goods and Services Tax (GST) – (December 2015) – Question 17 – Q 17: How will be Inter-State Transactions of Goods and Services be taxed under GST in terms of IGST method? Ans: The Empowered Committee has accepted the recommendation for adoption of IGST model for taxation of inter-State transaction of Goods and Services. The scope of IGST Model is that Centre would levy IGST which would be CGST plus SGST on all inter-State transactions of taxable goods and services. The inter-State seller will pay IGST on value addition after adjusting available credit of IGST, CGST, and SGST on his purchases. The Exporting State will transfer to the Centre the credit o

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Question 18 – Draft-Bills-Reports – Frequently Asked Questions (FAQ) GST – FAQ [OLD] on Goods and Services Tax (GST) – (December 2015) – Question 18 – Q 18: Why does introduction of GST require a Constitutional Amendment? Ans: The Constitution provides for delineation of power to tax between the Centre and States. While the Centre is empowered to tax services 52 and goods upto the production stage, the States have the power to tax sale of goods. The States do not have the powers to levy a tax o

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Question 19 – Draft-Bills-Reports – Frequently Asked Questions (FAQ) GST – FAQ [OLD] on Goods and Services Tax (GST) – (December 2015) – Question 19 – Q 19: How are the legislative steps being taken for CGST and SGST? Ans: A Joint Working Group has recently been constituted (September 30, 2009) comprising of the officials of the Central and State Governments to prepare, in a time-bound manner a draft legislation for Constitutional Amendment. – Statutory Provisions, Acts, Rules, Regulations, Tax

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Question 14 – Draft-Bills-Reports – Frequently Asked Questions (FAQ) GST – FAQ [OLD] on Goods and Services Tax (GST) – (December 2015) – Question 14 – Q 14: What is the scope of composition and compounding scheme under GST? Ans: As already mentioned in Answer to Question 6, a Composition/Compounding Scheme will be an important feature of GST to protect the interests of small traders and small scale industries. The Composition/Compounding scheme for the purpose of GST should have an upper ceilin

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Question 15 – Draft-Bills-Reports – Frequently Asked Questions (FAQ) GST – FAQ [OLD] on Goods and Services Tax (GST) – (December 2015) – Question 15 – Q 15: How will imports be taxed under GST? Ans: With Constitutional Amendments, both CGST and SGST will be levied on import of goods and services into the country. The incidence of tax will follow the destination principle and the tax revenue in case of SGST will accrue to the State where the imported goods and services are consumed. Full and com

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Question 16 – Draft-Bills-Reports – Frequently Asked Questions (FAQ) GST – FAQ [OLD] on Goods and Services Tax (GST) – (December 2015) – Question 16 – Q 16: Will cross utilization of credits between goods and services be allowed under GST regime? Ans: Cross utilization of credit of CGST between goods and services would be allowed. Similarly, the facility of cross utilization of credit will be available in case of SGST. However, the cross utilization of CGST and SGST would generally not be allow

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