GST - Refund

How GST- refund works, Types of refund and how to avail it?

What is a GST refund?

When an entity has paid more GST to the government than it was liable for, it is eligible for a GST refund. If the entity wishes to claim the refund, it can by going through the online process. The time to claim a GST refund is a maximum of two years from the date of payment.

When a business is exporting goods, it can apply for a refund of GST.

For example-

Types of incidents where a refund is eligible:

1. When a business is exporting goods, it can apply for a refund of GST.

Exporter pays I-GST at the time of export of goods, then the business will be eligible to get a refund of the IGST paid at the time of export.

For example:- Khanna Exporters export cloth to foreign nations. At the time of export, he paid a tax of 5% I-GST, then Khanna Exporters can claim a refund of the I-GST paid by them to the government.

2. For any goods sold to the foreign embassies or the United Nations, under Section 55 of the C-GST Act 2017, they are eligible for a refund. This section says International bodies are not taxed with GST in India.

Example:- If World Health Organisation (WHO) buys masks and PPE kits from India and pays a tax of 12% at the time of purchase, then the WHO can apply for a refund of GST from the government.

3. Foreign nationals and tourists who visit India (not for immigration purposes or stay for less than six months in India.) are not liable to pay taxes in India and any purchases made with the proper bill are eligible for GST refund.

Example: If a tourist visits India and buys a pair of shoes and jeans, he will have to pay the tax at the time of purchase. Later on, he/she can apply for a refund on GST from the government.

4. If the value of goods and services can not be determined at the time of supply and generating the bill, a provisional assessment can provide us with a framework for determining provisional tax to be paid.

If the provisional amount paid to the government exceeds the actual eligible amount, the business can apply for a refund of the balance amount.

Note: Any refund which is not credited by the government within the specified time limit, business is eligible for the interest of 24% of the principal amount.

How to apply for a GST refund?

Step 1: Check for the ledger and check if there is any excess payment to claim a refund.

Official site:- gst.gov.in

Step 2: On the top left corner there is an option for Application of refund.

Step 3: The amount you owe will be auto-populated in the different GST columns.

Step 4: Select your bank account and enter bank details.

Step 5: Upload the supporting documents, these will act as proof of the excess amount of GST you have paid to the government.

Step 6: In the next step, you can click on the review application which will download a PDF containing all your details about the application.

Step 7: Check down the checkbox and click submit.

Disclaimer: This article is intended for general consumption only. The information in the article was correct at the time of publication, but it is subject to change due to changes in government rules and regulations. The contents of the blog may not be copied unless prior permission is obtained.

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