Steps to initiate a refund in India - 2023
GST refund process Flow Chart
Log into the GST portal
Go to the services tab
Select the refund pre-application form option
Mention the reason or type of refund and click on “ Create refund application”
Specify the desired refund period
Choose if nil or not
Fill in the required details
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STEPS TO INITIATE A REFUND
In order to initiate a refund we begin by submitting a refund pre-application form. This is a form that taxpayers fill out that contains details pertaining to their business, aadhaar number, details of their income, investments and expenditure, their tax details and more.
There are two ways to go about filling in this application form.
The first method is as follows -
Log into the GST portal and under the Services tab select Refunds. Choose the ‘Refund pre-application form’ option.
The next step is filling in all the required details in the form. Once you are done filling in this form you can submit it.
Nature of Business – Manufacturer, merchant exporter, trader, and service provider
Date of issue of IEC (only for exporters) – Those applying for a refund on account of exports (without payment of tax) must furnish the date of issue of the Import Export Certificate.
The aadhaar number of the primary authorised signatory is mandatory.
Value of exports made in the financial year (only for exporters) – This must be computed at the GSTIN level and not the PAN level.
Income tax paid in the financial year
Advance tax paid in the next financial year
Capital expenditure and investment made in the financial year.
REFUND PROCESS OF IGST (Exports)
Under GST, exports are considered to be ‘Zero-rated supplies’ and are eligible for a refund by the exporter. The GST portal makes it easier to facilitate refunds. The criteria that are required to be met in order to initiate a refund are as follows-
To begin with, it is necessary to fill out Table 6A in GSTR-1 with the shipping bill details pertaining to export transactions involving tax payment and submit it before the specified deadline. Secondly, the summarized information should be provided, along with the corresponding tax payment, and the return must be filed within the deadline stipulated by GST regulations.
Ensure that the export invoice data included in Table 6A of Form GSTR-1 contains accurate and complete details such as the shipping bill number, shipping bill date, and port code. Please note that export transactions conducted during a specific tax period should be reported in both GSTR-1 and GSTR-3B for the same corresponding tax period. It is important to report the total amount of IGST and cess in Table 3.1 of GSTR-3B as a value equal to or higher than the sum in Table 6A and Table 6B of GSTR-1.
The GST authority considers the shipping bill as an application for a refund. The GST portal forwards the export details from GSTR-1 to ICEGATE, along with confirmation of the filing of GSTR-3B for the relevant tax period. The Customs system compares the information in GSTR-1 with the details in the shipping bill and Export General Manifest (EGM) and then proceeds with the refund process.
Once the refund payment has been credited to the taxpayers' accounts, the ICEGATE system will share the payment information with the GST portal. The GST portal will then notify the taxpayers through SMS and email, providing them with the relevant information.
PROCESS TO FILE A REFUND APPLICATION IN FORM RFD-01
Step 1: To initiate the GST refund process, access the GST portal and navigate to the 'Services' tab. Then, click on 'Refunds' and choose the 'Application of Refund' option.
Step 2: On the ensuing page, indicate the reason or type of refund and click on 'Create refund application'.
Step 3: Specify the desired refund period and select 'Yes' or 'No' when prompted with the dialogue box asking if a nil refund is being filed.
For nil refund applications, the taxpayer can proceed by checking the declaration and filing using either DSC or EVC.
This is not applicable for certain refund types, including excess cash balance in the ledger, cases where intrastate supply is later classified as interstate supply (or vice versa), assessments, provisional assessments, appeals, or any other applicable orders.
Step 4: Enter the required details on the corresponding page based on the selected refund type from the previous step.
AFTER THE REFUND APPLICATION IS DONE
Once the application is filed, the taxpayer will be able to track his application under the Refunds tab. When the application has been processed and reviewed by a GST OFFICER he can carry out one of the following actions.
Provisional refunds for specific refund types can be granted using form RFD-04. It must be issued within seven days from the date of acknowledgment, with at least 90% of the claimed refund amount being granted.
Upon filing a complete refund application, an acknowledgment in form RFD-02 is issued within 15 days. Applicants now have the option to withdraw their refund application using form RFD-01W. Upon submission of the withdrawal application, the refund amount, which was debited from the taxpayer's electronic credit or cash ledger upon filing the application, will be credited back to the respective ledger.
Alternatively, if any deficiencies are identified by the officer within the same time limit, a deficiency memo in form RFD-03 can be issued to the applicant. In such cases, if the refund amount had been debited from the electronic cash/credit ledger, an automatic re-credit will occur. A fresh application must be submitted in these instances.
In the event of application rejection or the need to recover a mistakenly granted refund, the officer can issue a notice seeking clarification using form RFD-08. The applicant is required to respond within 15 days using form RFD-09.
The officer will pass a sanction or rejection order in form RFD-06. In cases of sanction, a payment order in form RFD-05 is issued. Sometimes, RFD-05 may be issued after RFD-04.
For certain situations, the officer may issue an order to withhold a sanctioned refund using form RFD-07 (part-B). In such cases, RFD-05 is never issued.
In cases of rejection or when a provisional refund is granted, an order to re-credit the refund from the taxpayer's electronic cash or credit ledger is made using form PMT-03.
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