SUMMARY OF DRAFT GOODS AND SERVICES TAX REFUND RULES

OCTOBER 2016 www.bdo.in SUMMARY OF DRAFT GOODS AND SERVICES TAX – REFUND RULES I. Refund of Tax and/or Input Tax Credit (ITC) or any other amount pa...
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OCTOBER 2016 www.bdo.in

SUMMARY OF DRAFT GOODS AND SERVICES TAX – REFUND RULES

I. Refund of Tax and/or Input Tax Credit (ITC) or any other amount paid by the applicant, may be claimed in the following circumstances: Chart 1 Refund of Tax on

Refund of Unutilized ITC

Exported goods/services

Used in Exports

Deemed Exports

In case of Inverted Duty Structure (IDS)

Refund of Tax or interest or any other amount paid where incidence of such tax is not passed to any other person

The applicant may make an application for Refund to the proper officer before the expiry of 2 years from the “Relevant Date”. Relevant date means: Sr. No.

Particulars

Relevant Date

1.

For goods exported outside India in case of Deemed Exports, the date on which return related to deemed exports is filed

The date on which the goods are exported out of India

2.

In case of goods returned for reconditioning, repairs, etc.

The date of entry into the place of business premises for performing such repairs etc.

In case of export of services earlier of the following dates

- Where supply is completed prior to receipt of payment, the date of receipt of payment - In case of advance received prior to issuance of invoice, the date of issue of the invoice

3.

Sr. No. 4.

5.

Particulars

Relevant Date

Where tax becomes refundable on account of any order or judgement

The date of such order of judgement - The end of financial year on which such refund claim arises; or - In case tax is paid provisionally, the date of final assessment

In case of refund of input tax credit on account of inverted duty structure

Other situations where refund can be claimed: 1. Wrong payment of IGST/CGST/SGST 2. Excess balance in electronic cash ledger (ECL) 3. Refund on purchases made by embassies /UN 4. Refund of advance tax payment by casual dealer II. The steps involved in claiming refund are pictorially depicted below: Chart 2

Refund claim excluding •Form GST RFD - 1 refunds mentioned in •Claim to be filed only after point (c) per chart 1 to Export Manifest / Export Report is deivered be filed in:

•Form GSTR - 3; or Refund claim relating excess balance in ECL to •Form GSTR - 4; or be filed in •Form GSTR - 7

Refund application to be accompained with documentary evidences Annex 1: Number and date of invoices received and issued, in case of IDS Annex 2: Certificate issued by a CA / Cost Accountant, in case where refund is Rs. 5 Lakhs or more

III. Refund in case where taxable goods and/or services are exported without payment of tax: Where any taxable goods or services are exported without payment of tax, under bond or letter of undertaking, refund of input tax credit shall be granted as per the below mentioned formula:

Refund Amount =

[(Export turnover of goods + Export turnover of services) X Net ITC] Adjusted Total Turnover

Notes: Refund amount Net ITC

Export turnover of services

Maximum refund admissible Input tax credit availed on inputs / input services (during the relevant period) (Payments received during the relevant period for export services) + (Advance payments received in prior period for services exported during the relevant period) – (advances received for export of services not completed during the relevant period)

Adjusted Total Turnover

(Turnover in a State) - (Exempt supplies)

Relevant period

Period for which refund claim has been filed

No refund of ITC shall be allowed if the supplier of goods and / or services avails Duty Drawback (allowed under Drawback Rules) or claims rebate of tax paid under CGST / SGST / IGST Act IV. Grant of provisional refund Provisional refund of 80% may be granted to notified persons (to be notified at ) on fulfillment of the below mentioned conditions: 1. The person claiming refund has not been prosecuted during any period of the 5 years immediately preceding the tax period to which the claim relates, under this act or earlier law, where the amount of tax evaded exceeds Rs. 2.5 crores 2. The GST Compliance rating should be > 5 on a scale of 10 3. No proceeding is pending on any issues which forms the basis of refund V. Refund to be withheld in certain cases Refund can be withheld in case of the following: 1. If the registered dealer has not submitted the return 2. If the registered dealer has not paid tax interest or penalty 3. If no stay has been obtained in case of any proceeding demanding tax interest and penalty 4. Where an order giving rise to a refund is subject matter of an appeal or further proceeding or where any other proceeding under this Act, is pending and the Commissioner/Board is of the opinion that grant of such refund is likely to adversely affect the revenue 5. Refund cannot be granted if the amount of refund is less than Rs. 10,000 6. Refund in case of embassies/UN is available only on Invoices where net taxable value is more than Rs. 5,000 Note: The officer has to issue the refund order within 90 days from the date of application. If refund is received post 3 months from the date of application, then the applicant is eligible to claim interest (rate of interest to be notified at a future date).

VI. Process Flow and Timelines for Refund

Common Portal

Application to be filed in GST RFD -1

Application to be scrutinized within 15 days

In case of Normal refunds

No

Deficiency in GST RFD - 1

No

Provisional Refund to be released within 7 days

Form GST RFD - 4

Acknowledgement in Form GST RFD - 2

Yes

To be communicated in GST RFD – 3

Applicant to rectify the deficiencies and apply for Refund If Officer is satisfied that the amount claimed as refund is not admissible or not payable

Notice to be issued within 15days in Form GST RFD - 7

Final Order to be sanctioned / rejected in GST RFD -5

If Refund order is completely adjusted against pending demand

Payment Advice for Refund of Tax in Form GST RFD – 8

Order to be issued in Form GST RFD - 6

Payment Advice for Refund of Interest in Form GST RFD – 9

If you require any further information about the material contained in the update, please get in touch with:

CONTACT US Suresh Rohira Partner Indirect Tax [email protected] Tel: +91 22 3332 1608

Mumbai The Ruby, Level 9, North West Wing, Senapati Bapat Marg, Dadar (W), Mumbai – 400028, INDIA Tel: +91-22-3332 1600

New Delhi - Gurgaon The Palm Spring Plaza Office No. 1501-08, Sector-54, Golf Course Road, Gurgaon-122001, INDIA Tel: +91-124-281 9000

Prashant Raizada Partner Indirect Tax [email protected] Tel: +91 124 281 9003

Naveen Rajpurohit Partner Indirect Tax [email protected] Tel: +91 80 4656 1307

Pune Floor 7 [VERVE], Building # 1 Cerebrum IT Park, Kalyani Nagar Pune 411014, INDIA Tel: +91 20 4019 9999

Bengaluru Unit # 101, Raheja Chancery, 133, Brigade Road, Bengaluru 560 025 INDIA Tel: +91-80-4656 1300

Hyderabad Manbhum Jade Towers, II Floor 6-3-1090/A/12 & 13 Somajiguda, Hyderabad 500082, INDIA Tel: +91-40-3024 2999

Note: This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO India LLP to discuss these matters in the context of your particular circumstances. BDO India LLP and each BDO member firm in India, their partners and/or directors, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it. BDO India LLP, a limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the international BDO network and for each of the BDO Member Firms. Copyright ©2016 BDO India LLP. All rights reserved. Visit us at www.bdo.in