Clarifications on Refund related issues under GST Law
by ReinHeads Team | Apr 4, 2020
| Clarifications on Refund related issues under GST Law |
| The Central Board of Indirect Taxes and Customs vide Circular No. 135/05/2020-GST dated 31.03.2020 (‘the Circular’) has issued various clarifications on refund related issues under Central Goods and Services Tax Act , 2017 (‘the CGST Act’).
We have hereinbelow summarized key clarifications:
1. Bunching of refund claims across Financial Years
| Prior to issuance of the Circular |
Post issuance of the Circular |
| As per Circular No. 37/11/2018-GST dated 15.03.2018 (later subsumed under Circular No. 125/44/2019-GST), restriction was placed on clubbing of refund claims for tax periods across different financial years (FYs) |
The Circular No. 125/44/2019-GST stands modified to that extent that the restriction on bunching of refund claims across FYs shall not apply |
2. Refund of accumulated Input Tax Credit (‘ITC’) on account of reduction in GST Rate
Refund of accumulated ITC under section 54(3)(ii) of the CGST Act, 2017 (on account of inverted duty structure) would not be available in cases where the input and the output supplies are the same.
Illustration: An applicant trading in goods has purchased, say goods “X” attracting 18% GST. However, subsequently, the rate of GST on “X” has been reduced to, say 12%. In the instant illustration, refund of accumulated ITC under of section 54(3)(ii) of the CGST Act would not be applicable since the input and the output supplies are the same.
3. Change in manner of refund of tax paid on supplies other than zero rated supplies
- · Vide Notification No.16/2020-Central Tax dated 23.03.2020, refund of taxes wrongly paid or paid in excess (other than zero rated supplies) will now be admissible proportionately in the respective original mode of payment i.e., either electronic cash ledger or electronic credit ledger
- · Such amount, shall be paid by issuance of order in FORM GST RFD-06 for amount refundable in cash and FORM GST PMT-03 to re-credit the amount attributable to credit as ITC in the electronic credit ledger
4. Refund of ITC shall be restricted to the invoices reflected in Form GSTR-2A
| Prior to issuance of the Circular |
Post issuance of the Circular |
| As per Circular No. 125/44/2019-GST dated 18.11.2019, refund of ITC in respect of invoices not reflected in Form GSTR-2A was also admissible and copies of such invoices were required to be uploaded |
The Circular No. 125 stands modified to that extent that refund of accumulated ITC shall be restricted to the ITC as per those invoices, the details of which are uploaded by the supplier in FORM GSTR-1 and are reflected in the FORM GSTR-2A of the applicant |
5. New Requirement to mention HSN/SAC in Annexure ‘B’ for refund application
- · In order to facilitate distinction between ITC on capital goods and/or input services for the purpose of refund, an applicant is now required to mention HSN/ SAC code mentioned on their inward invoices
- · Suitably modified statement of invoices i.e., Annexure-B (to be submitted with application for refund of unutilized ITC) is attached in the Circular.
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