Refund Process for Exporters under GST | H&R Block | Blog
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March 21, 2018

Refund Process for Exporters under GST

Every business sector has been impacted, both in a negative as well as a positive way, post-GST implementation. This is the reason why a lot of people were sceptical about the GST regime when it was announced to be introduced and replaced by the pre-GST services.

GST refund process was one such task where a lot of people were having trouble understanding the complete procedure and how to go through with it. Exporters, amongst all the other groups, were suffering due to the heavy blockage in working capital which was the result of either payment of IGST during the exports or due to unutilised input tax credit on inputs.

In this blog, we will be discussing the process of refund under GST which will help you understand the procedure better.

Options Available to Exporters for Export

  1. May supply goods or services or both under Bond or Letter of Undertaking in GST RFD 11, without payment of IGST and claim a refund of unutilized input tax credit.
  2. May supply goods or services with payment of integrated tax and claim refund of IGST.

Situations where Refunds Arise

Refunds might arise, as per the Section 54(8) of the CGST Act, under the following situations:

  • Export of goods without paying IGST (accumulated input tax credit)
  • Export of goods with payment of IGST, Rule 96 applicable
  • Export of services with or without paying IGST, Rule 89 applicable for both situations
  • Goods or services supplied to SEZ unit or SEZ developer
  • Deemed exports
  • Tax deposits under wrong head
  • ITC accumulated because of the inverted tax structure
  • Assessment or provisional assessment or appeal or any other order
  • Tax paid in advance and then refunded due to partial supply or non-supply

Refunds are to be granted to the dealer electronically, according to the provisions of GST Law, based on the application in RFD-01 on the government portal in all the cases mentioned above, with  exception of exports of goods with the payment of IGST, for which the details of the exports are to be filled in the Table 6A of GSTR-1 form and that form will be deemed as an application for refund.

Rule 96 of the CGST Rules govern the refund of integrated tax that is paid on the goods exported out of India. The rule states that the shipping bill that is filed by the exporter will be considered as the application for refund. Also, this application will be deemed to have been filed only when the details of the exports are furnished in Table 6A of GSTR-1 form and the applicant has filed a valid return in GSTR-3B form.

In the recently held 26th GST Council Meeting, the council has decided to the available tax exemptions on imported good for the next 6 months, beyond 31st March 2018. Therefore, the exporters, who are availing several promotion schemes introduced for export, can continue to avail exemptions on their imports till 1st October 2018. Also, by this time an e-wallet scheme is said to be put in place to allow the exporters to continue availing the benefits in the future.

The pace at which GST refunds for exports are granted has also been increased, as discussed in the council meeting. The Council has subsequently directed GSTN to forward the balance refund claims immediately to the Customs or Central GST or State GST authorities, whichever may be applicable, for expeditious sanction and robust disbursal.

The GST Council has made the decision to implement e-wallets from 1st October 2018, as a permanent solution for making the GST refund process and compliance easy for exporters. This scheme is basically a creation of electronic wallets which will be credited with virtual or notional currency by the Directorate General of Foreign Trade (DGFT). Exporters will then be able to make payment of GST or IGST with this notional or virtual currency on the goods that they import or procure so that their funds are not blocked and can be used for business purposes.

Filing your GST returns and claiming refunds can be a hectic job. earlyGST by H&R Block India has a powerful team of GST tax experts who will file your taxes for you with a promise of claiming the refunds on your behalf.

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Sony Pandey
Sony Pandey
Sony works as a Tax Researcher at H&R Block India. She makes taxes easy to understand for people. She creates content for the website, marketing activities and social media. She carries experience in creating a wide variety of content like blogs, guides, press releases, research papers, etc.

8 Comments

  1. GC says:

    According to the latest circular issued on 15th March on the subject, the refund application for refund of input credit against exports can be filed by combining one or more months / quarters within the same financial year. However the relevant form in the GSTN portal has not been modified and as a result the refund application is permitted monthwise only, thereby delaying the process further. The Government needs to fix the issue without further delay.

  2. Santosh Pandit says:

    We are exporting goods without payment of duty. Our customer has given rate increase with effect from last six months supply and we have raised rate difference invoice separately in March’18 which is added in GSTR-1 and GST 3 B also.
    Now we are filling refund application as ” Accumulated excess ITC ” . FWe have add rate difference amount in total turnover. As a rate difference bill there is no shipping bill or EGM reference no.

    Can we add this rate difference amount in total zero rated turnover and total adjusted turnover.

    Without Shipping bill No and EGM reference file is not generating. Please advise.

    • H&R Block India says:

      Till now, there is no such provision in GST late for filing refund in this case because shipping bill or EGM reference is mandatory. Many representations have been made to GSTN portal for making amendments.

  3. Deven says:

    Good article! I am once clarification. For exporters of services, without payment of IGST, I am given to understand that refunds are not being processed. So all reverse charge GST payments are stuck with the Govt and only July 2017 refunds have started. From August 2017, return filing for refund itself is not available-making the cash flow situation of exporters terrible. Is this true? I could not get this clarity from your article.

  4. Agrawalla Brothers says:

    please clarify under mention fourmula
    Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) x Net ITC ÷Adjusted Total Turnover

    if we purchase in august which ITC Occurred in August

    but export in September

    Is We Get Refund of ITC which occurred in August ?

    From above said formula we can’t get any refund, then how we get ITC refund against export?
    please clarify.

  5. Raghupathi U R says:

    sir we are having accumulated ITC what is the procedure to claim the same
    I got information that refund is available only on Raw material and services related to goods and not on consumables and oils and man power,telephone which are the form part of manufacture. is it true. i want to know which are the documents required to file along with gst refund application

    • H&R Block India says:

      The document that needs to be uploaded is explained as follows “A statement in Annex 1 of FORM GST RFD-01 containing the number and date of invoices received and issued during a tax period in a case where the claim pertains to refund of any unutilized input tax credit under sub-section (3) of section 54 where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies.”

  6. Pankaj Singh says:

    Hi I am an exporter of goods and exporting goods without payment of IGST.. now I does not have sufficient balancein my IGST inpu credit ledger to claim the full refund.
    Is itany provision to claim the partioal refund on GST portal and if yes what is the process for the same and how the other pending balance refund get filed.

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