Manual Refund Filing for Zero-Rated Supplies Under GST Introduced by CBIC

The Government of India, through Circular No. 17/17/2017-GST dated November 15, 2017, has provided detailed guidelines for the manual filing and processing of refund claims related to zero-rated supplies under the Goods and Services Tax (GST) regime. This step was necessitated due to the non-availability of the refund module on the GST common portal. Here’s a comprehensive overview of the process and key takeaways for taxpayers.

What Are Zero-Rated Supplies?

Zero-rated supplies refer to exports of goods or services and supplies made to Special Economic Zone (SEZ) developers or units. Under GST, taxpayers can claim refunds for:

Integrated GST (IGST) paid on zero-rated supplies.
Unutilized input tax credit (ITC) on inputs or input services used in making zero-rated supplies.

Manual Filing of Refund Claims 

Until the refund module becomes operational on the GST portal, taxpayers are required to file refund claims manually. Here’s how the process works:

1. Refund of IGST Paid on Export of Goods 

No separate application is required.
The shipping bill filed by the exporter is treated as the refund application.
The refund is processed once the export manifest/report is filed, and the taxpayer has submitted a valid return in FORM GSTR-3 or GSTR-3B.

2. Refund of IGST Paid on Export of Services or Supplies to SEZ 

Taxpayers must file FORM GST RFD-01A online, take a printout, and submit it manually to the jurisdictional GST officer.
Relevant documentary evidence must be attached.

3. Refund of Unutilized ITC 

FORM GST RFD-01A must be filed online, and the claimed amount is debited from the electronic credit ledger.
A printout of the form, along with proof of debit and supporting documents, must be submitted manually to the jurisdictional officer.

Steps for Processing Refund Claims 

The refund process involves the following steps:

Step 1: Filing and Acknowledgment 

Refund applications are scrutinized for completeness.
Acknowledgment in FORM GST RFD-02 is issued within 15 days if the application is complete.

Step 2: Provisional Refund 

Provisional refunds (90% of the claim) are sanctioned within 7 days of acknowledgment.
Refund orders are issued in FORM GST RFD-04, and payment advice is issued in FORM GST RFD-05.

Step 3: Final Refund 

The final refund order is issued within 60 days of receiving the complete application.
If any amount is rejected, it is re-credited to the electronic credit ledger using FORM GST PMT-03.

Step 4: Communication Between Authorities

Refund orders are communicated between the Central and State tax authorities to ensure timely payment of sanctioned amounts.

Key Forms Used in the Refund Process

FORM GST RFD-01A: Application for refund.
FORM GST RFD-02: Acknowledgment of application.
FORM GST RFD-03: Deficiency memo.
FORM GST RFD-04: Provisional refund order.
FORM GST RFD-05: Payment advice.
FORM GST RFD-06: Final refund sanction/rejection order.
FORM GST RFD-07: Order for adjustment/withholding of refund.
FORM GST PMT-03: Re-credit of rejected refund amounts.

Important Points to Note

Refund claims can be filed with either the Central or State tax authority, but payment will be made by the respective authority responsible for the tax type (e.g., CGST by the Central authority, SGST by the State authority).
Taxpayers must ensure that refund claims are filed with complete documentation to avoid delays.
The manual process requires maintaining detailed records in refund registers for tracking applications, provisional refunds, and final refunds.

Conclusion

The manual filing and processing of refund claims for zero-rated supplies under GST is a temporary measure to ensure that exporters and SEZ suppliers can claim their refunds without delay. Taxpayers are advised to follow the prescribed procedures meticulously and maintain proper documentation to facilitate smooth processing of their claims.

In case you face any issues related to Indirect Tax-Customs, GST, Foreign Trade Policy (FTP), Arbitration matters and Central Licensing and related advisory matters in India then please feel free to get in touch with SJ EXIM Services.

We offer Legal advice and litigation support in matters related to Indirect Tax-Customs, FTP, other Indirect Tax matters & Arbitration law, all sorts of Central licensing and related matters. Come and explore the new way of doing business with us!

Source: CBIC, Ministry of Finance, Govt. of India

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