GST Refund process has been gone through various discussion and research.
Still it has not been finalized.
GST will bring tax reforms and accordingly the GST refund should be kept minimum.
The refund process should be fast and transparent.
The report of joint committee on business process of GST recommended the following.
Probable reasons of GST Refund
- Excess Payment of GST
- Refund arise on ‘export of goods and services under the claim of rebate
- Refund arise on finalization of provisional assessment.
- Refund of Deposit paid at the time of Appeals
- Payment of taxes at the time of assessment but no liability arises after finalization of assessment
- Refund of tax to embassies or UN bodies.
- Refund of Input credit since the output is exempted
- Refund due to excess input tax is paid but the output tax is less.
- Year end discounts provided by suppliers through credit notes
- Refund for international tourists
The refund process has been designed keeping in view of the above reasons.
Separate treatment is advised by the Joint Committee for each reasons.
The taxpayer will have the option receive back the tax or to adjust the same with future liability.
Refund Forms
Electronic forms have been suggested by the committee for ease of process.
Time period for filing refund claim
It is suggested that one year from the relevant date should be given for claiming refund.
The relevant date will be different for each case depending on the reason given above.
Supporting Document To Claim Refund
It should be minimal and adequate so the both taxpayer and authority find it easy to deal.
Normally following documents are given with the claim.
- The challan
- Copy of invoices
- Documents showing that the burden of taxation has not been passed.
Time Limit for Preliminary Scrutiny of Documents
30 Working days’ time period is suggested for this purpose.
Piece meal queries by authority should be avoided.
Unjust Enrichment and GST Refund
In indirect tax there is always a possibility that a person has passed the final burden of tax to the final consumer.
If still the person claims refund of that tax, then same is unjust enrichment.
So unjust enrichment is a situation where a person get enriched at the expense of other person.
So every refund application must be seen in light of unjust enrichment.
The burden of proof is on applicant (Taxpayer).
So Chartered Accountant’s Certificate is required in this regard if refund amount exceeds specific limit.
Interest on GST Refund
It may be provided that refund should be processed within 90 days. Otherwise it will liable for Interest.
The rate of interest may be around 6% p.a.
I hope that the GST bill will be passed soon in the parliament and GST refund process will become reality.