GST Refund: How to Calculate & Claim?

The Indian Government provides a refund under GST in those cases where you have paid extra by error. You can claim this refund within 2 years from the date of payment. Of course, this refund is subject to extensive research and verification by concerned authorities.

This article will help you understand GST refunds and how to apply for a refund in GST.  Also, you will learn how to calculate a refund amount according to the GST refund formula.

GST refund can be claimed by a person or a business that has paid excess tax. The Indian Government has allowed for a transparent and easy GST claim process. This procedure is completely standardized and can be entirely carried out online.

Here we will discuss some types of refund formulas for GST.

GST refund calculation for export

For export supplies, the formula for calculating your GST refunds is as follows:

Refund Amount for GST= Turnover of Zero rated supply of Goods + Turnover of Zero rated supply of service * Net ITC / Adjusted Total Turnover

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When inward supply tax is higher than outward supply tax

This is also known as inverted rated supply.

Refund Amount for GST=Inverted rated supply turnover * Net ITC / (Adjusted Total Turnover) -  Tax payable on Inverted rated supply

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Refund calculation under GST

A GST refund calculator for any general case is as follows. First, you need to calculate the liability for the time duration when making a GST payment. From this amount, deduct the GST payment. If there is an excess, that is the refund sum you are eligible to receive. Thus, refund calculation under GST becomes easy.

Mandatory Pre-Application Form

Before filling the main refund application in RFD-01, you must now submit a Refund Pre-Application Form on the GST portal. This form collects business details, Aadhaar number of the signatory, export data, and income tax details. It cannot be edited once submitted, so accuracy is crucial.

First, you need to submit an RFD-01 form online through the GST portal. Here are the steps:

Step 1: Go to the GSTN portal.

Step 2: Find an RFD-01 application form.

Step 3: Once you have done this, you will receive an SMS or email with a unique acknowledgement number.

Step 4: Check the ITC for a reduction in carrying forward.

Step 5: Calculate GST refund to understand whether the amount is reduced in tallying.

Step 6: Within 30 days of applying, the authorities will check and validate the refund.

Step 7: Authorities will also be on guard against any unjust enrichment.

Step 8: If a claim is found to be violating the unjust enrichment, your refund amount will get sent to the Consumer Welfare Fund or CWF.

Step 9: You can also expect authorities to calculate the GST refund, and in case the refund amount stated by you is higher than the one they have figured, a pre-audit procedure will begin.

Step 10: The refund amount will be directly credited to any applicant’s account through the NEFT, ECS, or RTGS.

Additionally, there are some points to note about the GST refund. The GST refund rules are as follows:

• Individuals are supposed to make any GST claims for a refund at the end of each quarter.
• In a situation where the amount to be refunded is less than Rs. 1000, no refund amount will be provided.

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You have to claim the GST refund within 2 years from the date of payment.

Often people want to know the time limit to claim a GST refund because they may not be able to claim it immediately. Hence it is worthwhile to understand that the GST refund time limit is the 2-year mark.

When you initiate the GST refund process, what are some of the documents that you will require?

• Firstly, you need to get all the relevant invoices to prove that you can claim a refund.
• If a refund is claimed on the export of services, the person must furnish a bank realization certificate to prove receipt of payment in overseas currency.
• If a supplier makes a claim to a Special Economic Zone unit, an officer will have to verify or endorse a receipt of these goods or services received in the Special Economic Zone.
• GST refund application in Form RFD-01.
• Tax invoices related to the refund claim.
• Proof of tax payment (challans).
• Export documents: For goods - shipping bills; for services - Foreign Inward Remittance Certificates (FIRCs) or Bank Realisation Certificates.
• CA/Cost Accountant Certificate: For all refund claims exceeding ₹2 lakh, a certificate from a Chartered Accountant or Cost Accountant is mandatory.
• Declaration for supplies to SEZ: A declaration that the SEZ unit/developer has not availed the ITC.

Here are the following situations where you can claim a GST refund. 

• Export of goods and services
• Purchases made by embassies
• Any service made to units and developers in SEZs
• Pre-deposit refund
• A refund that arises because of any appellate tribunal or authority
• Excess payment by mistake
• A unique case where a refund of input tax credit under GST is done based on inverted duty structure
• Refund of SGST and CGST in case there has been inter-state trade