GST Refunds: Old vs. New Systems Compared

GST refund processing has evolved from a manual, document-heavy process to a faster online system. This guide compares the old and new GST refund systems and what the changes mean for claiming your refund on time.

This article is part of a series that contrasts the reporting requirements of the current and the new GST return systems. Following our previous discussion on export-related refund claims, this segment will examine the process for claiming and reporting various other types of GST refunds.

Current GST Refund System Reporting

Under the existing GST framework, refunds are typically claimed using Form RFD-01 or RFD-01A, with a few exceptions. For instance, in the case of goods exports, Table 6A of GSTR-1 itself serves as the refund application for paid taxes. Other refund scenarios necessitate filing GSTR-3B along with the RFD-01 application. Initially, from July 1, 2017, to September 25, 2019, Form RFD-01A was submitted online and then physically presented to GST facilitation centers for processing. Currently, the GST portal supports fully online processing of RFD-01 refund applications.

The following refund categories require the RFD-01 form within the current return system:

• Surplus funds in the electronic cash ledger or overpayment of tax
• Export of services with tax payment
• Accumulated Input Tax Credit (ITC) on inputs for export of goods or services without tax payment
• Refunds arising from GST assessment orders
• Accrued ITC due to an inverted duty structure
• Supplies to Special Economic Zone (SEZ) units or developers, regardless of tax payment
• Refunds for deemed exports, applicable to either the supplier or the recipient
• Tax initially paid as intra-state supply but later reclassified as inter-state supply
• Advances provided for supplies not yet rendered or invoices not issued

In addition to the RFD-01 application, taxpayers are also required to declare a summary of their GST refunds in their annual return, Form GSTR-9, and the reconciliation statement, Form GSTR-9C.

New GST Refund System Mechanism

The updated GST returns system incorporates a primary return complemented by two annexures. Given that the refund application process largely operates independently from GST returns, significant modifications are limited to a few specific refund types. Annexure ANX-1 now includes a ‘Would You Claim Refund?’ option for taxpayers reporting supplies to SEZ units/developers and deemed exports. Suppliers must indicate whether they intend to claim GST refunds. If they opt not to, the recipients, such as SEZ units or developers, become eligible to claim the tax refund on these supplies. Furthermore, options for amending annexures and returns are available via ANX-1A and RET-1A. A new validation has been integrated into these amended returns, preventing the reporting of invoices or documents for which refunds have already been processed in ANX-1A.

For most other refund types, excluding goods exports, the claim procedure remains consistent with the current return filing system. RET-1 introduces a new Table 8, titled ‘Refund claimed for electronic cash ledger,’ which mandates reporting of tax, interest, penalties, and fees categorized under each tax head. This table facilitates taxpayers in reporting GST refund claims resulting from an excess cash balance in their ledger, whether due to overpaid taxes or refunds issued from assessment orders.

Impact of the Revisions

The modifications concerning supplies to SEZ units and deemed exports are designed to enhance the efficiency and accuracy of refund processing. These changes enable tax authorities to monitor refund activities for each transaction effectively, thereby preventing duplicate claims.

Frequently Asked Questions

Who can claim a GST refund?

Refunds can be claimed for excess balance in the electronic cash ledger, unutilised input tax credit from exports or an inverted duty structure, and tax paid in excess or by mistake, subject to conditions.

How is the new GST refund system different from the old one?

The new system is fully online through the GST portal with a single application (RFD-01), electronic processing and faster credit, replacing the earlier manual submissions and separate follow-ups.

How long does a GST refund take?

Once a complete application is filed, the officer is generally required to process it within the statutory timeline of about 60 days, with provisional refunds available in eligible export cases.