Any reform or change comes with some challenges and difficulties. Though GST is expected to bring a positive impact on all the sectors of Indian economy, simpler tax structures and a GDP boost of more than 2% as per as the experts believe, yet at the same time, it has brought several challenges and complications too. Doubts still persist in the minds of people. However, we hope that with time, things will settle down and the details, as well as the fine print, will become clearer. There are many doubts about the Refund procedure under GST too. Here is a brief guide on GST Refund to help you understand the same.
GST Refund
It is extremely important to make the process of GST refund easier otherwise a delay in the refund may pose serious problems for the exporters or manufacturers. This would hamper their working capital and the cash flow.
As of now, as per GST news, there are indications that delay of months in providing the refund to the exporters and manufacturers may be expected. This calls for more stringent norms and rules to process the refund under GST making it faster and smoother.
Now the question arises, under which circumstances, the refund under GST will be provided. Such situations are listed as under:
- In the case of extra payment of tax which may happen due to an error or negligence.
- At the time of finalization of provisional assessment.
- The Refund of tax payment also happens when the purchases are made by Embassies or UN bodies.
- In the case of credit accumulation when output is exempted from tax or is rated nil.
- Credit accumulation due to different tax rate between output and inputs.
- International tourists can also have tax refund
GST Refund Process
In order to claim refund, follow these steps:
- Go to GSTN portal and fill up the Application form for claiming refund
- After the application is filed, you will receive an acknowledgement number via SMS or email
- The adjustment would be made to return and cash ledger and reduce the “carry-forward input tax credit” automatically.
- The application form for refund and other documents that you have submitted will be scrutinized within a period of 1 month.
- The refund application will be examined if there is the concept of “unjust enrichment”. In case it does not qualify, the refund would be transferred to consumer welfare fund.
- A pre-audit will happen if the amount of refund claimed is more than the predetermined amount of refund.
- The refund will be credited to the account of applicant via any electronic medium like ECS, RTGS or NEFT.
Also, as the legal news says, the application for refund can be made at end of each quarter and no refund will be allowed for an amount of less than Rs 1000. A refund application will be processed within a period of 90 days, if it is not, then the rate of interest of 6% is suggested by the Subramanian committee.
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