All you need to know about GST refunds!

All you need to know about GST refunds – A Definitive Guide!

GST can be cumbersome and one needs to know about their taxation schemes. As a merchant / exporter one has to pay GST and there are benefits available as refunds under certain schemes. These refunds can be made possible with proper claims. Many people make mistakes and cannot avail such claims.

This time we will learn about the basics of GST refunds where most of the exporters tend to make mistakes.

# How GST is paid?

GST on exports can be paid in two ways

Through IGST

Through the payment of IGST- Exports are treated as an interstate movement of goods & hence attract IGST.

If you pay IGST on exports you can claim the refund on this Integrated GST paid, by filing a Shipping Bill (Deemed Refund Application) & other supporting documents.

The person-in-charge of such exports must file an Export Report or Export Manifest & mention the Shipping bill number & dates to file a refund claim.

Through Bond / Letter of Undertaking (LUT)

Through Bond or Letter of Undertaking (LUT)- If the export of goods takes place without the payment of the Integrated GST & using a Bond or LUT, through Form GST RFD-11, then the Exporter can claim a refund of the unutilized & eligible ITC.

Any taxes paid as an input to the Exports can be claimed by the Exporter.

You must file an Export Report or Export Manifest under the Custom's Act and then file a refund application on the common portal.

An exporter can carry out exports, with or without paying the GST. In either case, he will be able to claim a refund of the IGST paid or the unutilized Input Tax Credit (where IGST is not paid).

# Who can claim GST benefits?

Taxpayer can claim a refund in GST in the following scenarios :

Exports of Goods & Services
Deemed Exports
Supplies to SEZ units & developers
Refund of accumulated ITC due to inverted duty structure

# What are the pre-requisites for GST refunds?

Taxpayer can claim a refund in GST in the following scenarios :

File form GSTR-1 for the month in which you are making the claim. Mention such supplies & their details against which you are claiming a refund in GSTR-1.
File form GSTR-3B for the month prior to the month when you are making the claim.
Filing Form GST RFD-01/1A.
File an Export Report or Export Manifest.
A Certificate by a CA or a Cost Accountant may be required in certain cases.

# Is there a specified timeline for claiming GST Refunds on Exports?
What is a 'Relevant Date'?

The most relevant date to claim the refund under GST for exports is the point in time when a Taxpayer can start claiming the applicable GST refund.
You can make the GST Refund Application till two years from the Relevant Date.

# FAQ’s regarding GST refunds on exports

We get order from a foreign agent abroad to whom we pay commission. Will it be taxable under GST?

The foreign agent, who facilitates the supply of goods, is included within the definition of intermediary. The place of supply of service for services provided by intermediary would be the location of service provider, i.e. the place where he is registered. Since a foreign agent is located outside India and not registered in India, the commission paid to him will not be taxable.

How GST will be paid on the conversion of foreign currency? Will it be on full value after conversion or some other formula will be applied?

For a currency when exchanged to Indian Rupee, the value of taxable purpose shall be equal to the difference in the buying rate /selling rate, as the case may be, and the RBI reference rate for the currency at that time multiplied by the total value of unit. In case RBI reference rate is not available for the currency, the value will be gross amount of Indian Rupee provided or received by the person changing the money.

Can you suggest the same with an example for better clarity?

For example, if a person converts USD 1000 at Rs 63 and RBI reference rate is Rs 64, then the taxable value will be (Rs 64-63 x 1000) Rs 1000 on which applicable GST will be charged. If a person converts 1000 Turkish Lira at Rs 18.50 assuming there is no RBI reference rate, taxable value will be 1% of Rs 18500 = Rs 185 on which applicable GST will be charged.

Whether factory stuffing facility under excise supervision continues under GST?

Under the GST, it has been decided to do away with the sealing of containers with export goods by CBEC officials. Instead, self-sealing procedure is allowed, with effect from 15th December 2017, subject to the following:
a) The exporter shall be under an obligation to inform the details of the premises whether a factory or warehouse or any other place where container stuffing is to be carried out, to the jurisdictional customs officer.

b) The exporter should be registered under the GST and should be filing GSTRI and GSTR2. Where exporter is not a GST registrant, he shall bring the export goods to a Container Freight Station/Inland Container Depot for stuffing and sealing of container.

However, in certain situations, an exporter may follow the self-sealing procedure even if he is not required to be registered under GST Laws. Such an exception is available to the Status Holders (One, Two, Three, Four and Five Star Export Houses) recognized by DGFT under a valid status holder certificate issued in this regard.

What will be the exact procedure of obtaining permission from Customs?

The exporter shall inform the jurisdictional Custom Officer of the rank of Superintendent or Appraiser of Customs, at least 15 days before the first planned movement of a consignment from his factory/premises, about the intention to follow self-sealing procedure to export goods from the factory premises or warehouse. The jurisdictional Superintendent or an Appraiser or an Inspector of Customs shall visit the premises from where the export goods will be stuffed and sealed for export. The jurisdictional Superintendent or Inspector of Customs shall inspect the premises with regard to viability of stuffing of container in the premises and submit a report to the jurisdictional Deputy Commissioner of Customs or as the case may be the Assistant Commissioner of Customs within 48 hours. The jurisdictional Deputy Commissioner of Customs or as the case may be the Assistant Commissioner of Customs shall forward the proposal, in this regard to the Principal Commissioner/Commissioner of Customs who would grant permission for self-sealing at the approved premises. Once the permission is granted, the exporter shall furnish only intimation to the jurisdictional Superintendent or Customs each time self-sealing is carried out at approved premises. The intimation, in this regard shall clearly mention the place and address of the approved premises, description of export goods and whether or not any incentive is being claimed.

How soon will refund of ITC in respect of export of goods or services be granted during the GST regime?

In case of refund of tax on inputs used in exports:
Acknowledgement will be issued within 15 days from the date of application for refund
Refund of 90% will be granted provisionally within seven days of acknowledgement of refund application.
Remaining 10% will be paid within a maximum period of 60 days from the date of receipt of application complete in all respects.
Interest at 6% is payable if full refund is not granted within 60 days.

What is zero rated supply under GST?

Under GST, exports and supplies to SEZ are zero rated as per Section 16 of the IGST Act, 2017. By zero rating, it is meant that the entire supply chain of a particular supply is tax free, i.e., there is no burden of tax either on the input side or output side.

What are the options for getting refunds for persons making zero rated supplies?

As per Section 16(3) of the IGST Act, 2017, a registered person making a zero-rated supply is eligible to claim refund in accordance with the provisions of Section 54 of the CGST Act, 2017, under either of the following options, namely:
(i) He may supply goods or services or both under bond or letter of undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit of CGST, SGST / UTGST and IGST; or
(ii) He may supply goods or services or both, subject to such conditions, safeguards and procedure as may be

**Prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied.

Zero-rated supplies made by suppliers who opt for the route of export on payment of integrated tax and claim refund of such tax paid. There can be two sub-categories of such suppliers namely:
(i) Exporter of goods
(ii) Service exporters and persons making supplies to SEZ Q.4 Who can get IGST refunds from Customs? Ans. The registered persons who have exported goods out of India on payment of IGST are eligible to get the refund of integrated tax so paid subject to certain conditions related to filing of correct and sufficient information in both GSTN and Customs system.

How to File application for getting IGST refund from Customs?

As per Rule 96 of the CGST Rules 2017, dealing with refund of IGST paid on goods exported out of India, 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 India, once both the export general manifest (EGM) and valid return in Form GSTR-3 or Form GSTR- 3B, as the case may be, has been refunded. Thus, once the shipping bill and the EGM is filed and a valid return is filed, the application for refund shall be considered to have been filed and refund shall be processed.

Who would process IGST refund claim?

Ans. The IGST refund module has been designed to have an in-built mechanism to automatically process and grant refund after validating the shipping bill data available in ICES against the GST return data transmitted by GSTN. Manual intervention would be limited to only exceptional cases where automatic validation becomes impossible due to some technical errors. Such exceptional cases would be only those which would be approved by the Board and the procedure in those cases would be separately laid out.

Did you know?

The Central Board of Indirect Taxes (CBIC) has cleared over Rs 10,700 crore worth refunds in GST and customs duty between April 8-23. In the ‘Special Refund and Drawback Disposal Drive’, the CBIC officers have cleared over 1.07 lakh Goods and Services Tax and IGST refund claims worth Rs 9,818.12 crore.

Over 1.86 lakh customs and duty drawback refund was processed totaling Rs 915.56 cr.

The amount mentioned above was either blocked or was pending and that was causing a problem to exporters specially during these unprecedented times.

We understand that the plethora of conditions and rules mentioned along with complex definitions are difficult to comprehend all at once. Hence, we at Bizbrains are always available to resolve your queries and doubts, however big or small

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