Treatment of Refunds on Export under proposed GST regime

Goods and Services Tax (GST) has been a game-changer in the Indian taxation system. It has brought a uniform tax structure throughout the country and also removed the cascading effect of taxes. GST has also brought transparency in the taxation system, which was lacking earlier.

Export is an important activity for any country as it brings foreign currency to the country. Under the proposed GST regime, export will be zero-rated. This means that the exporter will not have to pay GST on the export of goods and services. The GST paid on the inputs used for export will be refunded to the exporter.

The process of claiming a refund of GST paid on inputs used in the export of goods and services under the proposed GST regime is not straightforward. Following is the process of claiming a refund of GST paid on inputs used in the export of goods and services under the proposed GST regime:

Step 1: Export of Goods and Services

The first step in claiming a refund of GST paid on inputs used in the export of goods and services is to export the goods and services. The export of goods and services must be in compliance with the provisions of the Foreign Trade Policy (FTP) and must be a zero-rated supply under the GST Act.

Step 2: Filing of GST Returns

The second step in claiming a refund of GST paid on inputs used in the export of goods and services is to file the relevant GST returns. The exporter must file GSTR-1, GSTR-2, and GSTR-3 returns. The exporter must also file GSTR-3B return for the relevant tax period.

The GST returns filed by the exporter must be in compliance with the provisions of the GST Act. The details of the export of goods and services must be correctly mentioned in the GST returns filed by the exporter.

Step 3: Filing of Refund Application

The third step in claiming a refund of GST paid on inputs used in the export of goods and services is to file a refund application. The refund application must be filed in Form GST RFD-01A.

The following details must be mentioned in Form GST RFD-01A:

Details of the invoices on which refund is being claimed
Details of the exports made during the tax period for which refund is being claimed
Details of the GST paid on inputs used in the export of goods and services
Details of the bank account to which the refund is to be credited

The refund application must be filed within 2 years from the date on which the relevant invoice is issued.

Step 4: Verification of Refund Application

The fourth step in claiming a refund of GST paid on inputs used in the export of goods and services is the verification of the refund application. The officer shall verify the refund application and the documents submitted along with it.

If the officer is satisfied with the details mentioned in the refund application and the documents submitted along with it, the refund shall be sanctioned within 60 days from the date of receipt of the refund application.

Step 5: Payment of Refund

The fifth and final step in claiming a refund of GST paid on inputs used in the export of goods and services is the payment of the refund. The refund shall be credited to the bank account mentioned in the refund application.

The refund shall be credited only after the officer is satisfied that the exporter has not passed on the incidence of the GST to any other person.

The process of claiming a refund of GST paid on inputs used in the export of goods and services under the proposed GST regime is a lengthy and time-consuming process. However, the government has taken several steps to simplify the process and make it more user-friendly.

The proposed GST regime is expected to bring transparency and efficiency in the taxation system. The refund of GST paid on inputs used in the export of goods and services is an important aspect of the proposed GST regime. It is expected to provide relief to exporters and encourage exports from the country.