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All you need to know about GST Payments and Refunds

It is crucial for GST to smoothen tax refund process because whenever the returns are delayed it disrupts the smooth workflow of goods manufacturers and service providers. GST will bring about strict regulations for processing the returns swiftly and efficiently so that the work process of manufacturers and exporters are not hampered.

Factors Under Which Returns on GST is Applicable

  • Accidentally making an excess tax payment.
  • Export of goods and services, services for which claim has been made, returns on accumulated input credit of duty.
  • When the provisional assessment has been finalized.
  • Refund on Pre-deposit for filing an appeal, including the refund availed for going after the appellate authority’s order.
  • Duty payment, taxation within an ongoing investigation etc.
  • Refund for the tax paid on purchases by Embassies or UN bodies.
  • Credit accumulation from the exemption of tax or nil tax on output.
  • Credit accumulation from the tax rate differences between output and inputs, which is also known as inverted duty structure.
  • End of year incentive or incentives based on volume credited by the supplier via credit notes.
  • Refund on tax available for international tourists.

Procedure of Refund Under GST

Procedure of Refund Under GST

The procedures for claiming refund of GST are as follows

  • File the application form while claiming for a refund through the GSTN portal.
  • The applicant will receive an acknowledgment number via SMS or email after the application has been filed electronically.
  • Any necessary adjustment will be made on the return or the cash ledger which will automatically reduce the carry-forward input tax credit.
  • Within 30 days of the filing of the refund application, the submitted application and documents will be thoroughly inspected.
  • A concept would be followed to examine each refund application and if it does not meet the criteria then the refund would instead be transferred to Consumer Welfare Fund.
  • If the refund exceeds the anticipated amount then it will be put through a pre-audit process so that the refund can be sanctioned.
  • Either via ECS, RTGS or NEFT the refund will be electronically credited to the applicant’s bank account.
  • The application for refund can be submitted at the end of each yearly quarter.
  • On claim amounts less than Rs. 1,000 no refund shall be paid.

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Payment of Tax as per GST

Earlier, companies used to pay Value Added Taxes on a monthly or quarterly basis as per their turnover. Input tax credit was not allowed and CST had to be paid during the crossing of state borders from another state.

However, under GST, the tax would be paid during the supply of goods. As per GST law, all the deposits made on tax, penalty, interest, fee or other amount paid by a taxpayer via net banking, credit/debit cards or NEFT, under specified conditions will be credited to the electronic cash ledger of the taxpayer. With GST, a taxpayer can pay the due tax electronically which will be automatically debited from the taxpayer’s electronic cash ledger.

Any person registered under GST must maintain his/her electronic input tax credit ledger, electronic cash ledger, and tax liability ledger. The electronic cash ledgers will record data of tax, penalty, interest, fees paid and payment made against CGST, SGST, and IGST. Every detail required in input tax credit under all the heads will be accessible from the Electronic Input Tax Credit Ledger. The tax liability ledger for all outstanding liability which results through the regular return, penalties and notices must also be maintained electronically.

Ways in Which Credit Available Through the Electronic Input Tax Credit Ledger can be Utilised

  • For all fulfillment of liability payable due to regular return under GST.
  • Reversal of credit due to a mismatch in the invoice, the amount of credit etc.
  • Any type of liability payment which resulted because of receipt of demand notices.

If any input tax credit is not claimed by the taxpayer for more than a year from the tax invoice submission day then it will be considered as expired or invalid.

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