Introducing Online GST Refund Process in 2019 by GSTN

The GST Network (GSTN) has introduced an online GST refund process, as decided by the 37th GST Council. With this process, taxpayers will easily be able to file refund through form RFD 01, which can further be processed online by the GST officers. The online refund system is into effect from September 25, 2019, on the GST portal.

Major Points:

  • Taxpayers can now file refund application (in RFD 01 form) easily and tax officers can execute it online
  • All communications between taxpayers and tax officers will be online as well

GST Refund Process Of Previous Years

Till now, the refund processing for the Central GST (CGST) and State GST (SGST) was done by a single tax personal to whom the taxpayer was assigned administratively. However, the disbursement for this was done by different accounting authorities of central and state tax departments respectively. This makes a delay of sharing sanction order between accounting personals, before the GST refund could be processed to the applicant.

GSTN Refund Process 2019

The new GST refund system launched by GSTN has done away with multiple accounting authorities for sanctioning the disbursement of the refund amount. Under new refund system, when the tax officer completes processing, the sanctioned amount will get credited to the bank account of the Taxpayer through Public Fund Management System (PFMS). The new system is being introduced to provide a boost to the disbursement speed of refunds and also improve the GST compliance, hence making refund a seamless experience for the taxpayer as well as the tax officer.

However, it may be noted that all refund applications filed before September 26, 2019, will be processed manually as done under the old refund process.

Features Of The New GST Refund System

The unique features of the new refund system launched by GSTN are as below:

  • Single Authority based refund system
  • Stage-by-Stage tracking of the GST Refund process
  • SMS and Email Updates for Important stages
  • Online Reply Utility for Notices

Digitization Making GST Refund Process Simpler In The Coming Days

After-April 2020, with the enrolment of new GST returns, the taxpayer will be able to auto-populate the GST refund details from his sales records. These auto-populated fields will be derived from taxpayers ‘refund from sales to SEZ and Deemed Exports’ and ‘refund from sales to B2B, Exports and B2C’ records.

If the field for a refund from sales to SEZ and Deemed Exports is populated indicated ‘Yes’, the supplier will get the refund from such transactions else SEZ/Deemed Exporter.

Similarly, in case of transactions other than SEZ and Deemed Exports, if the document to be auto-populated to GST refunds is Yes then values will be auto-populated in refund form.

Contact us or email us at [email protected] in case of any queries related to GST registration.

Refiling Incorrect Nil GST Refund Application

Till the presentation of GST into the Indirect Taxation System, the happening of blunders in the filing methods has been a normal situation. Among these situations, one such situation that has been of most extreme worry for the Taxpayers is incorrect Nil GST Refund application, wherein the taxpayer had a real refund guarantee for the given time frame yet no choice of re-filing was accessible.

Understanding real hardship to taxpayers, CBIC has given a Circular No. 110/29/2019 – GST dated third October 2019, wherein it gave an alternative to re-file refund application if taxpayer has accidentally filed NIL GST refund application.

What Is Incorrect NIL GST Refund Application?

While filing refund application GST RFD-01/1A for a particular classification and period, the enlisted individual is shown a message through a popup box to file NIL refund for the given time frame. Also, with the absence of data/information about such option, taxpayers frequently incidentally file a NIL refund application in GST RFD-01/01A for the period during which they were really qualified for refund. Such filings are considered as incorrect NIL GST refund. To add more to the taxpayer’s predicament, when an application is filed on the GST portal, the choice to re-file such application isn’t available.

Along these lines, upon demands through different representations, the board, upon definite examination of the issue, has chosen to enable such taxpayers to re-file the application, just for the particular time and under that particular category for which the incorrect case was filed.

But, while settling the issue, so as to guarantee the validity of the case, the board has set down two conditions to be fulfilled by a taxpayer, before he can apply for the refund.

Conditions For Refiling Accidental NIL GST Refund Application

CBIC is explained vide circular that if an enlisted individual has filed “NIL” refund application for a period under a specific category then he may re-file for a similar period under same classification just in the case that he fulfills below 2 conditions:

Condition-1: Such individual has already filed a NIL refund application for such period.

Condition-2*: Registered individual has not filed refund application under such category during any consequent period.

* Condition-2 will apply for refund claims falling under below categories:

  • Refund of unutilized input tax credit (ITC) in case of exports without pay of tax;
  • Refund of unutilized ITC if there should be an occurrence of provisions made to SEZ Unit/SEZ Developer without payment of tax;
  • Refund of unutilized ITC by virtue of accumulation because of modified tax structure;

How To Re-File Refund Application?

If the given taxpayer fulfills the previously mentioned conditions, he is qualified to refile for his refund as below:

So as to re-file the Refund application, the taxpayer will be required to file the application under “Some other” category rather than NIL for example the category under which the original “NIL” GST RFD-01/01A was filed.

The filed GST RFD-01/01A ought to relate to a similar period for which NIL refund application was filed.

The application will be accompanied with all supporting records, which is generally required to guarantee a refund.

Methodology Of Granting Refund

Once the approved office gets the application for a refund, he is required to ascertain the permissible amount according to relevant arrangements given in para 3 of Circular No.59/33/2018-GST dated 04.09.2018 (wherever applicable).

Upon detailed examination of the application, if the approved official acknowledges the entire or any piece of the amount asserted as payable for refund, in such case he will request the taxpayer in writing to charge such amount from his electronic credit record through FORM GST DRC-03.

Once the evidence of such debit is received by the best official, he will issue the refund and payment order in form GST RFD-06 and form GST RFD-05, respectively.

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GST Exclusion List – 7 New Services Included

On the proposals of the 37th GST Council Meet, Goa, few services have been added to the GST Exclusion List

What is Exempt Supply under GST?

Under GST, certain products and services, as finalized by the govt, are excluded from goods and services tax on their supply for example ‘NIL’ GST rate is applied to such transaction. Section 2(47) of the CGST Act 2017 characterizes an excluded supply of goods and additionally benefits as a supply that either

  • Pulls in Nil/0% of GST, or
  • Completely absolved from tax under section 11 of the CGST Act, or
  • Entirely absolved from tax under section 6 of IGST act, or
  • Incorporates non-taxable supply(as characterized in section 2(78) of the CGST Act, 2017).

Besides, these absolved supplies of goods/services can be categorized into 3 classes as given:

  • Absolute Exemption: The exclusion of goods as well as services tax with no conditions pertinent.
  • Conditional Exemptions: The exclusion of goods and services, anyway subject to specific conditions.
  • Partial Exemption: Intra-State supplies of goods or services got from an unregistered individual by a registered individual is excluded from payment of tax under reverse charge provided the total estimation of such supplies got by an enlisted individual from all or any of the providers doesn’t surpass ‘ 5000/ – in a day.

So as to expedite the suggestions on excluded services, as made by the GST board in their 37th GST Council Meeting, enthusiastically, the CBIC has released notice No 21/2019 – (CT Rate) dated September 30, 2019 in alteration to Notification No. 12/2017 (CT Rate) dated June 28, 2017 (“Services exclusion warning”).

Services Rationalized Or Added In The GST Exemption List, As Recommended By The GST Council

Rationalized Services In GST Exclusion List

  1. Services given by the Central Government, State Government, Union territory or local authority to a business element with a total turnover of up to “such sum in the previous financial year as makes it qualified for exclusion from enrollment under the Central Goods and Services Tax Act, 2017 (12 of 2017)” is excluded. Prior the turnover was determined as “twenty lakh rupees (ten lakh rupees if there should be an occurrence of a unique category state) in the previous financial year” which has now been rationalized.

2. Services provided by:–

  • an arbitral council,
  • an organization of advocates or a person as an advocate other than a senior advocate, by method for lawful services,
  • a senior advocate by method for lawful services,

to inter-alia a business element with a total turnover of up to “such sum in the former financial year as makes it qualified for exception from enrollment under the Central Goods and Services Tax Act, 2017 (12 of 2017)” is excluded. Prior the turnover was indicated as “twenty lakh rupees (ten lakh rupees if there should arise an occurrence of a unique category) in the previous financial year” which has now been rationalized.

New Services Added In The GST Excluded List

S. No. 9AA has been embedded in Services exclusion notice to exclude “Services provided by and to FIFA and its backups directly or indirectly identified with any of the occasions under FIFA U-17 Women’s World Cup 2020 to be hosted in India”.

Correction has been brought under S. No. 14 of Services exclusion notice to explain that services by method of residential or lodging purposes, having an estimation of supply of a unit of convenience underneath or up to one thousand rupees for every day is excluded.

Condition to S. No. 19A/19B of Services exclusion warning has been corrected to broaden the exemption of services by method for transportation of goods by an airplane/vessel from customs station of clearance in India to a spot outside India till September 2020. Prior it was excluded only up to September 2019.

S. No. 24B has been embedded in Services exclusion notification to exclude “services by method for storage or warehousing of grains, beats, fruits, nuts and vegetables, spices, copra, sugarcane, jaggery, crude vegetable strands, for example, cotton, flax, jute and so forth., indigo, unmanufactured tobacco, betel leaves, tendu leaves, coffee and tea”.

S. No. 29B has been embedded in Services exclusion warning to exclude”services of life insurance provided or consented to be given by the Central Armed Police Forces (under Ministry of Home Affairs) Group Insurance Funds to their individuals under the Group Insurance Schemes of the concerned Central Armed Police Force”.

S. No. 35 of Services exclusion notice has been corrected to exclude services of general insurance business provider under “Bangla Shasya Bima” scheme.

S. No. 82A has been embedded in Services exclusion notification to exclude”Services by method for right to admission to the occasions organized under FIFA U-17 Women’s World Cup 2020″.

Point To Be Noted

  • The Notification has been brought into impact from October 01, 2019.
  • Comparative Notifications have been given for UTGST and IGST Law.
  • Moreover, “Services given by a delegate when the area of both provider and beneficiary of goods is outside the taxable region”, subject to specific conditions, have been excluded by method for extra amendment in IGST notification.

Enquire with Certicom Consulting in case of any queries.