New
Published on:
February 20, 2023
By
Paramita

Consumers/Unregistered persons can now file GST refund claim for cancelled contracts

The government has now allowed consumers or unregistered persons to file a GST refund claim for cancelled contracts with registered dealers. This move is aimed at protecting the interests of consumers who have made advance payments for goods or services, but have not received them due to cancellation of the contract.

Prior to this change, only registered persons could file such refund claims under GST. This meant that consumers who had made advance payments to unregistered persons, or small vendors who were not registered under GST, were not eligible for refunds.

The new rules now allow consumers and unregistered persons to file refund claims for cancelled contracts with registered dealers. The refunds will be processed by the registered dealers, who will then claim the amount from the GST authorities.

Conditions for claiming refund

Consumers and unregistered persons who wish to claim a refund for cancelled contracts must meet certain conditions:

  • The contract must have been cancelled by the registered dealer
  • The advance payment must have been made to the registered dealer
  • The refund claim must be filed within one year from the date of cancellation of the contract
  • The refund claim must be accompanied by a copy of the cancelled contract and proof of payment

How to file a refund claim

Consumers and unregistered persons who wish to file a refund claim for cancelled contracts must follow these steps:

  1. Obtain a copy of the cancelled contract and proof of payment
  2. Prepare a refund claim in Form GST RFD-01A
  3. Submit the refund claim to the registered dealer
  4. The registered dealer will process the refund claim and claim the amount from the GST authorities

Impact on consumers and small vendors

This move will benefit consumers who have made advance payments for goods or services, but have not received them due to cancellation of the contract. It will also benefit small vendors who were not registered under GST, as their customers can now file refund claims for cancelled contracts.

However, the new rules may also increase the compliance burden for registered dealers, who will now have to process refund claims from consumers and unregistered persons. They may also face delays in receiving their refunds from the GST authorities.

Conclusion

The government's move to allow consumers and unregistered persons to file GST refund claims for cancelled contracts is a positive development for the small business sector. It will help protect the interests of consumers and small vendors, and ensure that they are not unfairly burdened by cancelled contracts.

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