Returns and Refund under GST

All GST registered businesses have to file monthly or quarterly GST returns
and an annual GST return based on the type of business. These GSTR filings
are done online on the GST portal.

What is a GST Return?

A GST return is a document containing details of all income/sales and/or
expenses/purchases that a GST-registered taxpayer (every GSTIN) is
required to file with the tax administrative authorities. This is used by tax
authorities to calculate net tax liability.

Under GST, a registered dealer has to file GST returns that broadly include:
• Purchases
• Sales
• Output GST (On sales)
• Input tax credit (GST paid on purchases)

Taxpayers registered under GST are required to follow the return

procedure to be able to file returns easily and take the benefit of
Input Tax Credit (ITC). A regular taxpayer under GST is required to
file two monthly returns and one annual return. However, there are
special category taxpayers registered under GST who need to furnish
separate returns. These taxpayers include:
• Non-resident taxable persons
• Taxpayers (small taxpayers) registered under the Composition
Scheme
• Persons allotted with Unique Identification Number (UIN) (foreign
diplomatic missions)
• Input Service Distributors
How many returns are there under GST?

There are 13 returns under GST. They are the GSTR-1, GSTR-3B, GSTR-4,
GSTR-5, GSTR-5A, GSTR-6, GSTR-7, GSTR-8, GSTR-9, GSTR-10, GSTR-
11, CMP-08, and ITC-04. However, all returns do not apply to all
taxpayers. Taxpayers file returns based on the type of taxpayer/type of
registration obtained.

Besides the GST returns that are required to be filed, there are statements
of input tax credit available to taxpayers, namely GSTR-2A (dynamic) and
GSTR-2B (static). There is also an Invoice Furnishing Facility (IFF)
available to small taxpayers who are registered under the QRMP scheme
to furnish their Business to Business (B2B) sales for the first two months
of the quarter. These small taxpayers will still need to pay taxes on a
monthly basis using Form PMT-06.
What is GST Refund?

GST refund is a process in which, registered taxpayers can claim excess

amount if they paid more than the GST liability. They can claim after
submitting a refund application with the necessary details in the GST portal.

The GST regime has provisions relating to refunds, and it aims at streamlining
and standardizing the procedures about refunds under GST. Therefore, a
standardized form has been created to make claims for refunds. The
procedure for making claims can be completed online on time.

Situations that can lead to Refund Claims:

A proper refund mechanism is necessary for effective tax administration. The
situations that could lead to refund claims include the following:
• Refund of taxes when embassies make purchases
• Supplies to developers and units in special economic zones
• Refund of accrued input tax credit
• Refund of pre-deposit
• Refund arising from order, judgment, direction or decree of the
Appellate Tribunal, Appellate Authority or any court of law
• Excess payment because of an error
• Refunds to overseas tourists of GST paid on commodities within the
country and carried to an international location when they depart India.

Refund Process under GST: In order to process a refund claim, the

following procedure must be adhered to:

• Visit the GSTN portal and fill in the application form meant for claiming
refund.
• You will receive an email or SMS which contains an acknowledgment
number after the filing of application is done electronically.
• The cash and return ledger will be adjusted and the "carry-forward
input tax credit" will be reduced automatically.
• The application for refund along with the documents you have
submitted will be scrutinized by the authorities with a 30-day period
after you have filed the refund application.
• "Unjust enrichment" (explained below) is a concept that will be thoroughly
scrutinized by the authorities. In case the application does not qualify, the
refund will be transferred to a Consumer Welfare Fund (CWF).
• In case the refund claimed by the individual in excess of the
predetermined amount of refund, a pre-audit process will be conducted
before the refund is sanctioned.
• The credit of the refund will be done electronically to the applicant's
account through NEFT, RTGS or ECS.
• Individuals are allowed to make their applications for refund at the end
of each quarter.
Documents Required:

• Applicants who wish to make a claim will have to file elaborate documents
in addition to the refund claim.
• The documents that have been prescribed for the same are standard.
Therefore, for each claim, the primary document that has to be submitted
is a statement of relevant invoices relating to the claim.
• If the refund is made on account of the export of services, not including
the statement of invoices, the relevant bank realization certificates
verifying receipt of payment in overseas currency should also be furnished.
• In case a claim is made by the supplier to the Special Economic Zones
(SEZ) unit, the authorized officer will have to make an endorsement
verifying the receipt of such commodities or services in the SEZ and submit
the same along with the other documents. Moreover, the SEZ unit will also
have to provide a declaration stating that the ITC of the tax paid by the
supplier has not been availed.