New GST refund procedure under the GST regime  

Analysis of Proposed GST Return Applicable from 01st July 2019 Part I

For GST REFUND: we have two scenario 

  1. a) Export with payment of IGST:

Form GST RFD-01/RFD-01A: GST export refund process will require the submission of the form RFD-01 (completely online) or RFD-01A (manual) in specific cases only.

(1) Export of goods: in the case of export of goods subject to payment of tax, no separate refund application is required, as the shipment bill itself will be treated as a refund application. The details entered in the form GSTR-1 will be matched to the details indicated in the shipping bill as filed with ICEGATE. The ICEGATE will then process the refund and credit on the same bank account as the taxpayer has indicated on its portal.

(2) Export of Services: a request for a separate refund in RFD-01A is required. Such a taxpayer must login to the GST portal and select Services > Refunds > Application for Refund > Export Services with Tax Payment > RFD-01A. Details on the export of services will need to be uploaded using the offline utility. It will also be necessary to provide the amount of refund and the bank account number in which the refund is to be credited. Upon successful filing, an Application Reference Number (ARN) will be generated which can be used to track the status of the refund application.

(b) Export without payment of IGST:

The process of refunding the GST for exports involves a different document in this case. The option to export goods without payment of tax may be used either in the context of a letter of undertaking (LUT) or a bond. In such cases, any ITC accumulated on unused input / input services will be available for refund. The LUT option is only available for a select number of exporters that meet the prescribed criteria. The procedure is similar to that for the export of services.

Form GST RFD-11: The LUT can be filed on the common portal in Form GST RFD-11 by accessing Services > User Services > Furnish Letter of Business (LUT). The required details are filled in and uploaded along with the digital signature as per the LUT filing procedure. The GST export refund process will not be complete without this submission.

In the case of a bond, it must be executed manually on a stamp paper, signed and submitted to the Deputy Assistant Commissioner, along with the relevant documents, such as Form RFD-11 on the taxpayer’s letterhead, bank guarantee, letter of authority, etc.

Form GST RFD-01/RFD-01A: Similar to the process of GST refund for exports in the event of a tax payment, this form should be used by taxpayers. Details relating to ITC attributable to zero-rated supplies must be entered and submitted on RFD-01 (completely online) or RFD-01A (manual). The taxpayer should confirm that RFD-11 has been filed. Upload the relevant documents and affix the digital signature to submit the form and the ARN will be generated for tracking.

The invoice declaration procedure in Form GSTR-1 is the same, except that ‘Without payment of tax’ must be selected in the GST Payment field.

GST export refund process under the new GST export refund process

The GST export refund process and the RFD-01A and RFD-11 refund application will remain the same under the new GST return system. In the return, there is a change in the reporting of export details. The following are the forms used to report the export refund details.

Form ANX-1: GST refund mechanism for exports under new GST returns will start with ANX-1. In this form, the export invoice details are to be uploaded in Table ‘3C – Exports with Tax Payment’ and Table ‘3D – Exports without Tax Payment’ depending on whether or not the IGST is paid for the supply.

For the tax period, all such export invoices on which the shipping bills / bill of export are available until the date of filing of the GST returns, i.e. on the 20th of the next month for monthly filers, or on the 25th of the month following the quarter for quarterly filers, must be reported. The remainder will be reported in the next tax year.

The details required in this field would be as follows:

  • Document details (invoice, credit or debit note, serial number, date, value)
  • HSN code (six-digit level)
  • Tax rate and taxable value
  • Relevant tax amounts (in the case of export with payment of tax)
  • Shipping bill / bill of export (no and date)

As soon as implementation begins, separate functionality will soon be b) It will then automate the process of refunding the GST for exports to a massive extent.

FORM RET-1: GST refund process for exports under the new GST return system will continue with the RET-1 declaration. The value and the amount of tax in relation to exports declared in ANX-1 will be auto-populated for outward supplies in Table 3A (rows 3 and 4). Therefore, the taxpayer simply has to verify the same and not re-enter the details.

New amendment return introduced: an amendment to the export details, whether or not with payment of IGST, may be made in ANX-1A to amend the original annex ANX-1 submitted for the tax period, either monthly or quarterly. This can be done by referring to the original details. These are going to be auto-populated to RET-1A. Note that an amendment to the export documents on which the refund has already been successfully claimed is not allowed. On the other hand, those export invoice details which have not been declared in previous periods may be reported in the current ANX-1 period itself.

Has the process of GST refunded for exports become easier?

The major change that can be seen is that there is an auto-population of details entered in ANX-1 to RET-1. It is different from the current / old system where GSTR-1 reporting is independent of GSTR-3B.

There will be an integrated facility for the importation of shipping bill details as well as an entry fee from ICEGATE to the GST portal for exports and imports. This manual document reporting process is temporary since the new GST system will have the portal auto-populating data directly from the ICEGATE database in the respective tables in the ANX-1 and 2 forms.

No changes were observed in the process of applying for refund in RFD-01/01A. When it comes to the export of goods, the filing of the shipping bill is considered to be an application for refund and continues under the new return filing system. In this case, quarterly return filers may have to wait longer for their refund to be processed.

Thus, the overall impact of the export reporting and refund claims under the new return filing system appears to be minor but definitely easier.

Post by Rajput Jain & Associates

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