Refund filing has been simplified and made easier for certain categories, and these changes have been made by GSTN. The changes are effective from 8th May 2025 and are particularly useful for exporters, SEZ suppliers, and deemed export claimants. This is what has changed:
1. No More Selecting a Tax Period
Taxpayers previously had to choose tax periods (From/ To dates) while submitting refund applications. For the following categories, there are no tax period selections needed:
- Export of Services (with tax payment)
- SEZ Unit/Developer Supplies (with tax payment)
- Deemed Export Refunds (Supplier claims)
All that is needed is to select the relevant refund category and click on Create Refund Application. The system automatically generates the refund application without requiring any tax periods to be selected.
2. Mandatory Return Filing
All pending returns (GSTR-1, GSTR-3B, etc.) need to be filed as of the application date if a refund is being filed. This is a critical step and will directly impact whether or not the application meets the required criteria to not get rejected.
3. Transition from Filing Based on Tax Period to Filing Based on an Invoice
The refund procedure is no longer period-based; it is now invoice-based. To complete the refund process, here is what you are required to send:
- Servicing Exports: Send invoices through Statement 2.
- SEZ Supplies: Use Statement 4.
- Deemed Exports (Supplier claims): Report in Statement 5B.
4. Invoice Locking Mechanism
- When invoices are uploaded for refund claims,
- They are locked and cannot be used for other refund applications.
Unlocking happens only in these two ways:
- If the application is withdrawn, or
- A deficiency memo is issued by the authorities.
Why This Matters
Increased Processing Speed: No selection of periods eliminates manual work for the business’s processes, thus reducing potential inaccuracies.
Increased Accuracy: Tracking at the invoice level provides transparency to all operations done on the invoices.
Improved Compliance: Reduced steps aid in the time of businesses.
These changes showcase GSTN's ongoing dedication to enhancing user experience within the ecosystem. It's more efficient and less burdensome, helping with compliance as well as cash flow, simply by implementing invoice-based filing.
About GST Hero
GST Hero is one of the first in the market to offer compliance and automate the processes of taxation through an overarching platform. They simplify and ease the tasks performed under Goods and Services Tax (GST) for a business. It has a range of digital solutions aimed at handling returns, e-invoicing, e-way bills, and refund claims accurately and efficiently. With automation, real-time data feed, and compliance monitoring, GST Hero reduces manual work and precision work, ensuring timely compliance without error.