Exports, Supplies to SEZ developers/units, Zero-rated supplies & Deemed exports are some special types of supplies under GST. These supplies usually don't attract GST Liabilities & even when it does, a refund of the same can be claimed by the Taxpayer.
The claiming of the GST Refund on Exports or Zero-rated supplies will revamp in the New GST Return System. This article is a detailed guide on the complete GST Refund Process.
A single guide that contains the most relevant answers for all of your GST refund on exports related questions.
By the end of the article, let us see how the GST Refund on Exports works currently & what are the expected changes under the New GST Return System.
The article cover
Know when you can apply for GST Refund for your business
What is GST Refund under Exports & How does it work?
Zero-rated supplies, Exports, Deemed Exports & Exports to SEZ units or developers are supplies that attract zero taxes, meaning taxes are not levied by the Government on such supplies.
However, any Taxes paid in the process are refundable under GST Refund on Exports.
There are two ways in which Exports can be carried out in India with respect to GST-
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 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).
Learn all about the basic details of Refunds under GST Export
Now, before we discuss how exactly can you claim a GST Refund on Exports, there are some common questions that pop-up & need to be answered.
What is Form GST RFD-01/1A?
Form GST RFD-01/1A is the form used for claiming GST Refunds. A Taxpayer can only claim a GST refund if the value is more than Rs. 1000, using GST RFD-01/1A.
The only difference between Form GST RFD-01 & GST RFD-1A is the former one is to be filed online & the later must be filed manually by the Taxpayer.
This form can be used for claiming a GST refund for the following cases-
- Exports-with payment of IGST
- Exports- without payment of IGST
- Excess payment of Taxes
- Deemed Exports
- Supplies to SEZ Unit or Developers
- For extra balance available in the Electronic Cash Ledger
- Cumulative ITC due to double or extra payment of input tax, such that the input tax is higher than the outward tax liability.
On filing the Form GST RFD-01-1A for claiming GST refunds in any of the mentioned cases, an acknowledgment- GST RFD-02 is generated by the Tax Authorities to intimate the Taxpayer of the processing of the refund.
In which refund type is Form GST RFD-01/1A not applicable?
There are a number of cases where Form GST RFD is not required or applicable for claiming the GST Refunds-
- Exports where IGST is paid & the Shipping Bill is deemed as a refund application.
- Exports with payment of Export Duty
- UN, Embassies & any other person so notified
- Casual or Non-residential Taxpayers
- Exports where duty drawback scheme is availed on the GST paid.
Who Can Claim GST Refund from Exports?
A 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 prerequisites to applying for a GST Refund ?
Following are the prerequisites that may be required before claiming a GST Refund-
- 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
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.Given below is the Relevant Time Table for various types of Exports
Goods Exported via Sea or Air
The date on which the ship or aircraft in which such goods are loaded, leaves India
Goods Exported via Land
Date when such goods cross the frontier
Goods Exported via Post
Date of dispatch of gods by the post-office to its destination outside India
Complete Supply of Service before payment receipt
Date of receipt of payment in convertible foreign exchange
Advance delivery of Services, prior to the date of issuance of Invoice
Date when the invoice is issued
Refund of unutilized ITC, when IGST is not paid at the time of Export
End of the financial year
6. Are there any Rules on claiming GST Refunds?
Following are the GST Refund Rules for exports that you must note before claiming any refunds on exports-
- You cannot claim a refund on goods that subject to Export Duty.
- You can claim the refund of unutilized Input Credits.
- You can Claim Input Tax Credit due to Inverted Duty Structure
How to Claim GST Refund on Exports- Explained
Now that you are aware of all the rules & prerequisites of the GST Refund Process, understanding it would be simpler & more organized.
There are two types of GST refunds in Exports, let us see the claiming process in detail for each one separately.
The Refund process in case of Export With Payment of IGST-
There is an option of Exporting goods with the payment of IGST, the refund for which can later be claimed by the Taxpayer.
On filing a refund application for the IGST Refund, a temporary grant of Provisional GST Refund is ordered, until the Tax Authorities check & decide to either sanction or reject the refund.
In cases where the exports are carried out with the payment of IGST, then you can claim a complete refund of the IGST amount by following the given process-
a. Reporting in ICEGATE- The first step in order to claim the refund of the IGST paid would be to file the Shipping Bill & other supporting documents on ICEGATE Portal.
The Shipping Bill is the primary document that must be filed to claim a refund of IGST.
b. GSTR-1 Filing- Step 2 would be to accurately report such supplies in the GSTR-1 (Outward Supply Returns). You must declare the details of Exports in Table 6A, Supplies to SEZ in Table 6B & Deemed Exports in Table 6C of Form GSTR-1.
Following are the details you need to furnish in these tables-
3.Shipping Bill number
4.Shipping Bill date
5.Total Invoice & Taxable value
6.Select 'With Payment of Tax' between with or without Tax payment
You need to be very careful while entering these details in Form GSTR-1, the details filed in this form must match with the details entered in the Shipping Bill.
The ICEGATE Portals matches & verifies the details of the two forms & a mismatch may cause you to lose the refunds.
C. GSTR-3B Filing- The final step would be to declare the details of Exports in Form GSTR-3B. you must fill the relevant details in Table 3.1(b)- Outward Taxable Supplies, of GSTR-3B.
The ICEGATE will then match the Shipping Bill details with the details that you entered in form GSTR-1 & then process the refund towards the bank account mentioned by you in the GST Portal.
On successful submission of the application, an Application Reference Number is generated that you can use to track the status of your application.
The GST refund can be expected to be disbursed to your registered bank account within 60 days by the procedure. If the Disbursal of GST Refunds exceeds the frame of 60 days then the interest of 6% from the date of export must be paid to the exporter.
The details of the refund can be seen in the Export Ledger by the Taxpayer.
You can check the refund status by logging into the GST Portal & using, Services > Refunds > Track status of invoice data to be shared with ICEGATE.
Note- This process is not applicable to the Export of services with payment of IGST. For such services, you will have to file the refund Form GST RFD-01/01A.
The Refund process in case of export without payment of IGST & using Bond or LUT-
There is an option for taxpayers to export goods or services without the payment of IGST. A special type of document is required though instead of paying the IGST.
A Bond or a Letter of Undertaking can be used to export goods without having to pay the IGST.
In cases where exports take place based on LUT or Bond, taxpayers will be allowed to claim the refund of unutilized ITC so paid in the making of such goods.
While claiming ITC on the export of goods the GST Return Filing process remains the same, you will need to file Form GSTR-1 & GSTR-3B as usual, except while claiming refund of ITC you need to select 'Without payment of tax' in the Exports Table.
You only need to file the following forms on the GST Portal to claim the refund of unutilized ITC-
a. Refund Amount Calculation on Exports through Bond/LUT- As per section 54(3) of the CGST Act,
Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) x Net ITC /Adjusted total turnover
b. Filing of LUT- you must declare the LUT separately in Form GST RFD-11 in the GST Portal, Services > User Services > Furnish LUT.
Furnish all the other details that are required in the form, digitally sign the Form & proceed to submit.
This is a mandatory step towards claiming the refund of ITC & if you miss this step your claiming process will be considered incomplete & hence invalid.
c. Declaring the Bond- While exporting through bonds you need to declare the bond manually signed on a stamp paper, offline & submit it to the Jurisdictional Deputy/Assistant Commissioner, along with other supporting documents.
d. Filing Form GST RFD-01/01A- Even while claiming the refund of ITC on Export of goods, you need to claim the refund by filing form GST RFD-01 (online) or GST RFD-01A (manual).
To successfully file this form & to keep it precise you must furnish all the required details, details of unutilized ITC on the zero-rated supplies, confirmation if GST RFD-11 is filed & add the digital signature before submitting it.
Make sure to attach the documents supporting the supplies with both the Bond & the LUT while claiming the refund under GST.
Just as in the IGST refund, you will get an Application Reference Number (ARN) through which you can track the status of the GST refund process on the Portal.
You can track the status of your application on the GST Portal, Services > Refunds > Track Application Status.
If the application is properly validated & approved by the Tax authorities you will receive the ITC in your Electronic Credit Ledger within 60 days from the date of acknowledgment.
Introduction of New GST Return in GST Refund Process- Changes & Effects
Unlike in the current GST filing system, the GST refund process in the New GST Return Filing System tends to look way simpler & very brief.
The reporting of form GST RFD-01/01A & GST RFD-11 remains the same even in the New GST Return Filing System.
The changes are there in the reporting of the Exports & other Zero-rated supplies in the Return Filing.
In the New GST Return Filing system, Form GSTR-1 will be replaced by GST Anx-1 & will contain an Invoice & HSN summary wise declaration of all the outward supplies liable to GST.
And GSTR-3B will be swapped by the main return filing form GST RET-1 (Normal) for regular GST Filers-Businesses with annual aggregate turnover of at least Rs. 5 Crores.
You need to furnish the details of GST Refund under exports in Anx-1 from where the information will auto-populate in the main return form GST RET-1.
Let us see how it works-
Reporting of GST Refunds on Exports in GST Anx-1
You need to report the invoice details in Anx-1 depending on whether IGST is paid while exporting or not in the following tables-
Table 3C- Exports with payment of tax
Table 3D- Exports without payment of tax
You need to declare the following details in the field-
1.HSN code (at the six-digit level)
2.Tax rate and taxable value
3.Relevant tax amounts (in case the export is made with payment of tax)
4.Shipping bill/bill of export (no. and date)
5.Document details (invoice, credit or debit note, serial number, date, value)
Reporting of GST Refunds on Exports in GST RET-1
The next step in claiming the GST Refund under the New GST Return is the declaration of such refunds in GST RET-1.
Since GST RET-1 is the summary main return form it only requires furnishing the tax amounts with respect to the Exports, which is auto-populated from Anx-1 in Table 3A ( Row-3 & Row-4).
This avoids manual entry & the error probability is reduced.
In case of any errors, the New GST Return has also introduced an amendment return named- Anx-1A. Although any missing Export invoice can be declared in the Anx-1 of the succeeding tax period.
Clearly, the GST Refund process or the reporting if refunds will be more seamless in the New GST Return System than it is in the current system.
Where in the current system, data entry is manual, the New GST Return System offers an automated population of data in the main return form.
Outlining is in process to integrate ICEGATE with the GST Portal for easier transfer of data & information from the GT Portal to ICEGATE & vice versa.
This integration may result in auto-population of the Export data from ICEGATE to Anx-1 & Anx-2. Apart from automation, the system becomes more transparent & thorough in the validation context.
This may reduce the odds of claiming bogus GST Refunds with the intent of Tax evasion.
Exports & the ITC or GST refunds on export of goods is a very complex concept & still stands a confusing and troublesome component of the GST Regime.
And it is only fair considering that it is a lengthy process & differs from case to case. There can be no single and generic GST Refund Process in Exports.
The process & type of refund will vary with individual cases, meaning there can be N number of possibilities with the type of refund a person is trying to claim.
Accuracy & a deep knowledge and understanding of exports & refunds are required to deal with these complex entities.
The Introduction of New GST Returns has reduced the length of the process to an extent & eases up the reporting of such supplies in the GST Returns.
No major change has been brought to the GST Refunds under Exports through New GST Returns as of now.
Although it will only be clear upon the actual implementation, as to what will be its impact on refunds but it is safe to say that it can be positive.
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