Frequently Asked Questions

What is GST refund?

Under GST laws, a standardized process of claiming GST refund online has been prescribed.

In GST, Refund has been discussed in section 54 of the CGST Act 2017. “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.

What is the time limit for claiming the refund?

The time limit for claiming a refund is 2 years from relevant date. The relevant date is different in every case. “Relevant date” has been prescribed in the Explanation to section 54 of The CGST Act 2017

Can refund claims be filed even if GSTR-1/3B for the particular period has not been filed?

No. Refund claim for a tax period can be filed only after filing the relevant GST Returns in FORM GSTR-1 and GSTR-3B for the said tax period.

What are the situations in which refund of accumulated ITC is allowed under GST?

Refund of accumulated ITC is allowed only when the credit accumulation is on account of zero rated supply or on account of inverted rate structure.

Can the exporter file refund claims by clubbing successive calendar months/ quarter or should the claim be filed on a monthly basis?

The Exporter, at his option, may file refund claim for one calendar month / quarter or by clubbing successive calendar months / quarters. The calendar month(s) / quarter(s) for which refund claim has been filed, however, cannot spread across different financial years.

In case of refund under exports, whether BRC is necessary for granting refund?

In case of refund on account of export of goods, the refund rules do not prescribe BRC as a necessary document for filing of refund claim. However, for export of services details of BRC is required to be submitted along with the application for refund.

Is there any minimum threshold for refund?

No refund shall be granted if the amount is less than Rs.1000/-. [Sec.54 (14) of the CGST Act 2017]

Can refund be withheld by the department?

Yes, the proper officer can withhold refund of accumulated ITC under Section 54(3) in the following circumstances:

i. If the person has failed to furnish any return till he files such return;

ii. If the registered taxable person is required to pay any tax, interest or penalty which has not been stayed by the Appellate Authority/Tribunal/ Court, till he pays such tax, interest or penalty; The proper officer can also deduct unpaid taxes, interest, penalty, late fee, if any, from the refundable amount – Section 54(10) (b) of the CGST Act. The Commissioner 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 Act

Can unutilized Input tax credit be allowed as refund?

Unutilized input tax credit can be allowed as refund in accordance with the provisions of subsection (3) of section 54 in the following situations: –

(i) Zero rated supplies made without payment of tax;

(ii) Where credit has accumulated on account of rate of tax on inputs being higher than the rate of taxes on output supplies (other than nil rated or fully exempt supplies). However, no refund of unutilized input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty, and also in the case where the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid on such supplies.

In case the tax has been passed on to the consumer, whether refund will be sanctioned?

Yes, the amount so refunded shall be credited to the Consumer Welfare Fund – Section 57 of the CGST Act.