Under GST, the GST refund is a way to get back the tax paid by the taxpayer. There are several situations where the taxpayer can claim a refund, such as excess payment of taxes or input tax credit accumulation. When a taxpayer files a refund claim, the GST authorities verify it and approve the refund. Once approved, the refund amount is credited to the taxpayer's bank account. However, the refund process can take some time, and in some cases, the taxpayer may be eligible for interest on the refund amount as well. In this article, we will cover the important definitions related to GST refund, along with the interest rates applicable to the refund.
Before we proceed to the interest rates for GST refund, let us first understand the important definitions related to the GST refund process.
A refund claimant is any person who applies for GST refund. A refund claimant can be a registered taxpayer, an unregistered person, or a person who has paid tax on behalf of another person.
A refund application is a document filed by the refund claimant to request the GST authorities to refund the GST amount.
A refund order is a document issued by the GST authorities approving the refund claim and instructing the proper officer to refund the amount.
Interest on GST refund is applicable in certain cases where the refund is delayed beyond a specified period. The interest rates applicable for GST refund are as follows:
If the refund is not granted within 60 days from the date of receipt of the refund application, the interest rate applicable is 6% per annum. However, if the refund is not granted due to the fault of the refund claimant, the interest will not be applicable.
If the refund is due to the accumulation of input tax credit (ITC), the interest rate applicable is 6% per annum from the date of payment of tax for which the ITC is accumulated.
If the refund is due to the pre-deposit made by the taxpayer, the interest rate applicable is 6% per annum from the date of payment of the pre-deposit to the date of refund.
In certain cases, the interest on GST refund may be applicable as per the provisions of the GST law. For example, if the taxpayer has paid tax on a supply which is not liable to tax or has paid tax in excess due to mistake or inadvertence, interest may be applicable on the refund amount as per the provisions of the GST law.
GST refund is an important aspect of the GST regime, and it is essential for taxpayers to understand the rules and regulations related to it. In case of delayed refund, the taxpayer may be eligible for interest on the refund amount as per the applicable rates. It is advisable for taxpayers to keep track of their refund applications and follow up with the GST authorities in case of delayed refunds.
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