When can GST be claimed back as a refund?
A GST refund is claimed in form RFD-01 within two years of the relevant date. The usual cases are tax paid in excess, zero-rated exports and supplies to an SEZ, and inverted duty where the rate on inputs is higher than the rate on output. Unused credit that fits none of those cases stays in the credit ledger.
When does a refund arise?
- Tax, interest, or an amount was paid and was not payable.
- Exports, or supplies to an SEZ, were made on payment of IGST, or under a letter of undertaking with credit left over.
- The rate on inputs is higher than the rate on outward supplies, and the credit on those inputs has accumulated.
- A balance sits in the electronic cash ledger because a challan was paid and the return did not use it.
A provisional refund of up to 90 per cent can be granted in the zero-rated cases that section 54(6) covers, before the officer finishes the order. It is not an automatic transfer on the day the form is filed.
How is it claimed?
RFD-01 is filed on the GST portal for the GSTIN that holds the balance, with the statement the case needs. Exports on payment of tax rely on the shipping bill and the return in which the IGST was paid. A letter-of-undertaking export relies on the credit that GSTR-3B did not use. Inverted duty uses the statement of inputs and output.
The officer can ask for the invoice, the shipping bill, or the calculation. A claim that does not match GSTR-1 and GSTR-3B is held until those returns agree.
What is the time limit?
Two years from the relevant date in section 54. For goods exported by sea or air, that date is the day the ship or the aircraft leaves India. For a refund of unused credit on a zero-rated supply, it is the due date of the return for that tax period. For other tax paid in excess, it is the date the tax was paid. The date on the tax invoice is not the relevant date in every case.
Two years from the relevant date. A refund filed after that date is out of time, even when the credit is still in the ledger.
What is not a refund?
Input tax credit that is simply unused is carried forward. It is not paid out because the quarter was quiet. Credit on capital goods is outside the inverted-duty refund. A blocked credit under section 17(5) is not refunded by calling it excess tax. A wrong HSN that produced the balance is corrected in the return, on the HSN page, before a refund is filed on top of it.
Frequently asked questions
Four questions cover the cash ledger, exports, inverted duty, and the two-year limit.
Is a balance in the cash ledger a refund?
A balance that was paid in and never used can be claimed back through RFD-01. A balance of input tax credit is not refundable just because it is unused. It needs one of the cases in section 54.
Do exports need IGST to be paid first?
Exports can be made on payment of IGST, which is then claimed back, or under a letter of undertaking without payment of tax, in which case the accumulated credit is claimed. Both routes are zero-rated. Neither is an exemption typed on a domestic invoice.
Can every unused credit be refunded?
No. Inverted duty refunds the credit on inputs where the rate on inputs is higher than the rate on output. Credit on capital goods is not part of that refund. Some goods are blocked by notification.
What happens after two years?
Section 54 requires the application within two years of the relevant date. A claim filed after that date is out of time. The relevant date depends on the kind of refund, and it is not always the invoice date.
Sources
Section 54 of the CGST Act sets the refund and the two-year limit. The application is RFD-01 on the GST portal.