GST Refund Process – 6 easy Steps to Claim Excess Payment of GST

In a few cases, we paid GST payment is more than the GST liability; it creates a situation to claim GST refund. Means, the taxpayer has made excess payment of tax either by mistake or by inadvertence resulting in more payment of GST tax, which was actually not required to be paid. The tax that has been paid is in excess, the same should be refunded to the taxpayer. This excess GST tax amount is shown as a balance in the Electronic Cash Ledger. You can claim excess GST paid as a refund within 2 years from the date of payment.

GST Refund Process

How to Refund Excess Payment of GST?

Here, I am going to explain simple steps for Refund process under GST.

How to Claim Refund under GST? The GST Refund process is very easy, once you followed below steps properly. Under GST refund claims, refund application has to be submitted in “Form RFD 01” within 2 years from the relevant date.

  1. Login to “GST Portal” with your “GST Username” and “GST Password”.
  2. Go to Services > Refunds > Application for Refund
  3. Select Refund of Excess Balance in Electronic Cash Ledger and click on “CREATE”.
  4. Once you click on CREATE, it will show you reflecting all balances in the Electronic Cash Ledger which can be claimed as refund. Here, you can enter the amount of the refund to be claimed in the editable “Refund Claimed” table.
  5. Select the Bank Account (in which you want the refund to be credited) from the drop-down and click on “SAVE“.
  6. Click on the checkbox in the declaration. Select the name fo the “Authorised Signatoryfrom the drop-down. (Note: Based on the type of your organisation click on ‘SUBMIT WITH DSC’ or ‘SUBMIT WITH EVC’)

Key info: Individuals are permitted to apply for refund at the end of each quarter.

RFD – 01 Submitted, you will receive a notification via an email or a mobile text message containing acknowledgment number for your electronically submitted application.

RFD 01 is filed; Refund ARN Receipt is generated in PDF format. Once the inspection of refund application is done by a GST officer satisfactorily, refund will be credited to the bank account.

The electronic cash and return ledger will be adjusted with the refund amount and the “carry-forward input tax credit” will be reduced automatically.

How Long Does it Take to Get GST refund?

Previous days refund process usually took years for sanction. But now it takes just 60 days from the date of receipt of the claim. The strong IT system and forward thinking of the GSTN have enabled this initiative.

In case, there is a delay in paying refund within 60 days of application, taxpayer shall receive interest at the rate of 6% PA. for the period exceeding 60 days till refund is received. And if the interest is arising on account of delay for the reason of adjudication, the government has to pay an interest of 9 % p.a. on the refund amount.

GST Refund Important Scenarios 

On disqualification of GST refund application, the refund gets transferred to a CWF (Consumer Welfare Fund).

Once your refund is claimed for excess GST paid, a pre-audit process is conducted earlier than the refund is approved.

The refund application form must be certified by a CA /Cost Accountant if the amount of refund exceeds Rs 2 lakhs.

In one scenario the amount of refund application is below Rs 5,00,000 both declaration by taxpayer and documents as evidence need to be attached.

In one scenario the amount of refund is below Rs 1,000, no refund will be provided.

When GST Refund Can Be Claimed?

The refund can be claimed under GST only possible when we will maintain effective tax administration. When the excess GST paid than assessed either accidentally or mistakenly refund can be claimed under GST Refund rules.

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