GST – GST FAQ 2nd Edition – June 2017 as Updated as on 1.1.2018 – 14 – Q 1. What is refund? Ans. Refund has been discussed in section 54 of the CGST/SGST Act. Refund includes (a) any balance amount in the electronic cash ledger so claimed in the returns, (b) any unutilized input tax credit in respect of (i) zero rated supplies made without payment of tax or, (ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), (c) tax paid by specialized agency of United Nations or any Multilateral Financial Institution and Organization notified under the United Nations (Privileges and Immunities) Act, 1947, Consulate or Embassy of foreign countries on any inward supply Q 2. Can unutilized Input tax credit be allowed as refund? Ans. Unutilized input tax credit can be allowed as refund in accordance with the provisions of sub-section (3) of section 54 in the following situations: –
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f such unutilized ITC at the end of the financial year in the GST Law. It shall be carried forward to the next financial year. Q 5. Suppose a taxable person has paid IGST/ CGST/SGST mistakenly as an Interstate/intrastate supply, but the nature of which is subsequently clarified. Can the CGST/SGST be adjusted against wrongly paid IGST or vice versa? Ans. The taxable person cannot adjust CGST/SGST or IGST with the wrongly paid IGST or CGST/SGST but he is entitled to refund of the tax so paid wrongly – Sec.77 of the CGST/SGST Act. Q 6. Whether purchases made by Embassies or UN are taxed or exempted? Ans. Supplies to the Embassies or UN bodies will be taxed, which later on can be claimed as refund by them in terms of Section 54(2) of the CGST/SGST Act. The claim has to be filed in the manner prescribed under CGST/SGST Refund rules, before expiry of six months from the last day of the month in which such supply was received. [The United Nations Organization and Consulates or Embassies are r
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upplies iii. refund of tax paid on a supply which is not provided, either wholly or partially, and for which invoice has not been issued; iv. refund of tax in pursuance of Section 77 of CGST/SGST Act i.e. tax wrongfully collected and paid to Central Government or State Government v. if the incidence of tax or interest paid has not been passed on to any other person; vi. such other class of persons who has borne the incidence of tax as the Government may notify. Q 9. In case the tax has been passed on to the consumer, whether refund will be sanctioned? Ans. Yes, the amount so refunded shall be credited to the Consumer Welfare Fund – Section 57 of the CGST/SGST Act Q 10. Is there any time limit for sanctioning of refund? Ans. Yes, refund has to be sanctioned within 60 days from the date of receipt of application complete in all respects. If refund is not sanctioned within the said period of 60 days, interest at the rate notified not exceeding 6% will have to be paid in accordance with se
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r can withhold any refund, if, the order of refund is under appeal and he is of the opinion that grant of such refund will adversely affect revenue in the said appeal on account of malfeasance or fraud committed – Sec.54 (11) of the CGST/SGST Act. Q 12. Where the refund is withheld under Section 54(11) of the CGST/SGST Act, will the taxable person be given interest? Ans. If as a result of appeal or further proceeding the taxable person becomes entitled to refund, then he shall also be entitled to interest at the rate notified not exceeding 6% [section 54(12) of the CGST/SGST Act]. Q 13. Is there any minimum threshold for refund? Ans. No refund shall be granted if the amount is less than ₹ 1000/-. [Sec.54 (14) of the CGST/SGST Act] Q 14. How will the refunds arising out of existing law be paid? Ans. The refund arising out of existing law will be paid as per the provisions of the existing law and will be made in cash and will not be available as ITC. Q 15. Whether refund can be mad
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applicant prove that the principle of unjust enrichment does not apply in his case? Ans. Where the claim of refund is less than ₹ 2 Lakh, a self-declaration by the applicant based on the documentary or other evidences available with him, certifying that the incidence of tax has not been passed on to any other person would make him eligible to get refund. However, if the claim of refund is more than ₹ 2 Lakh, the applicant is required to submit a certificate from a Chartered Accountant or a Cost Accountant to the effect that the incidence of tax has not been passed on to any other person. Q 19. Today under VAT/CST merchant exporters can purchase goods without payment of tax on furnishing of a declaration form. Will this system be there in GST? Ans. There is no such provision in the GST law. They will have to procure goods upon payment of tax and claim refund of the tax paid or the unutilized input tax credit in accordance with section 54(1)/54(3) of the CGST/SGST Act. Q 20.
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ommunicated to the applicant within 15 days from the date of receipt of application complete in all respect. Q 22. What is the time period within which provisional refund has to be given? Ans. Provisional refund to the extent of 90% of the amount claimed on account of zero-rated supplies in terms of sub-section (6) of section 54 of the CGST/SGST Act has to be given within 7 days from the date of acknowledgement of complete application for refund claim. Q 23. Is there any specified format for filing refund claim? Ans. Every claim of refund has to be filed in Form GST RFD 1. However, claim of refund of balance in electronic cash ledger can be claimed through furnishing of monthly/quarterly returns in Form GSTR 3, GSTR 4 or GSTR 7, as the case may be, of the relevant period. Q 24. Is there any specified format for sanction of refund claim? Ans. The claim of refund will be sanctioned by the proper officer in Form GST RFD-06 if the claim is found to be in order and payment advice will be is
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tax structure. Are there any exceptions? Ans. Yes. Refund of accumulated ITC will not be admissible for construction services. Refund will also not be admissible where credit accumulation due to inverted tax structure is in respect of the following goods: Sr. No. Tariff item, heading, sub-heading or Chapter Description of Goods 1 5007 Woven fabrics of silk or of silk waste 2 5111 to 5113 Woven fabrics of wool or of animal hair 3 5208 to 5212 Woven fabrics of cotton 4 5309 to 5311 Woven fabrics of other vegetable textile fibres, paper yarn 5 5407, 5408 Woven fabrics of manmade textile materials 6 5512 to 5516 Woven fabrics of manmade staple fibres 6A 5608 Knotted netting of twine, cordage or rope; made up fishing nets and other made up nets, of textile materials 6B 5801 Corduroy fabrics 6C 5806 Narrow woven fabrics, other than goods of heading 5807; narrow fabrics consisting of warp without weft assembled by means of an adhesive (bolducs) 7 60 Knitted or crocheted fabrics [All goods] 8
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(including electro-mechanical) signalling, safety or traffic control equipment for railways, tramways, roads, inland waterways, parking facilities, port installations or airfields; parts of the foregoing Q 28. Whether the above restriction will also be applicable for zero rated supplies? Ans. No. It has been clarified vide Circular No. 18/18/2017-GST dated 16.11.2017 that the restriction on refund of unutilized input tax credit in inverted tax structure is not applicable in zero rated supplies because the relevant Notification No. 05/2017-Central Tax (Rate) dated 28.06.2017 restricting refund of unutilized input tax credit has been issued under clause (ii) of the proviso to sub-section (3) of Section 54 of the CGST Act, 2017. Q 29. In respect of export of goods on payment of IGST, will the exporter need to file a separate refund claim? Ans. No. The shipping bill filed by an exporter shall be deemed to be an application for refund of integrated tax paid on the goods exported out of Indi
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