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.

What is a GST refund?

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.

How to calculate GST refund?

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 in the export*NET ITC(Total Turnover-Exempt Turnover)

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(Total Turnover-Export Turnover)-Inverted rated supply tax payable

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.

How to claim a GST refund?

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.

When to claim a GST refund?

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

What is the time limit to claim a GST refund?

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.

What are the documents required for a GST refund?

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.

Situations where GST refund claim can be endorsed

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

Frequently Asked Questions

✓ What do you mean by unjust enrichment?

Unjust enrichment means that a claimant is not falsely gaining any additional income at the expense of another. GST is an indirect tax that the end consumer bears. Business owners have to pass the “unjust enrichment” claim test. If they fail, the amount they were claiming has to be transferred to the Consumer Welfare Fund.

✓ Is there any case of paying interest on delayed refunds?

If there is a delay longer than 60 days from the time of application, 6% interest is applied to the refund amount. And for a scenario where an appellate tribunal or authority directs a refund, the government shall pay 9% interest on the refund if there is a failure to sanction it within 60 days.

✓ What is the GST refund amount in India?

Only 80% of the claimed amount will be refunded on a provisional basis in the case of exports. Such a claimant will receive the remaining 80% after document verification.