Centre to hasten GST refunds: 

Centre to hasten GST refunds: 

Context

The Centre on Friday termed as “wild estimates,” exporters claiming that working capital was getting blocked due to delay in Goods and Services Tax (GST) refunds.

What is GST?

 It is a destination based tax on consumption of goods and services.  It is proposed to be levied at all stages right from manufacture up to final consumption with credit of taxes paid at previous stages available as setoff.   In a nutshell, only value addition will be taxed and burden of tax is to be borne by the final consumer.

 The tax would accrue to the taxing authority which has jurisdiction over the place of consumption which is also termed as place of supply.

What is a tax REFUND?

Timely refund mechanism is essential in tax administration, as it facilitates trade through the release of blocked funds for working capital, expansion and modernisation of existing business.

The provisions pertaining to refund contained in the GST law aim to streamline and standardise the refund procedures under GST regime. Thus, under the GST regime, there will be a standardised form for making any claim for refunds. The claim and sanctioning procedure will be completely online and time bound, which is a marked departure from the existing time consuming and cumbersome procedure.

Situations Leading to Refund Claims

A claim for refund may arise on account of:

• Export of goods or services
• Supplies to SEZs units and developers
• Deemed exports
• Refund of taxes on purchase made by UN or embassies etc.
• Refund arising on account of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court
• Refund of accumulated Input Tax Credit on account of inverted duty structure
• Finalisation of provisional assessment
• Refund of pre-deposit
• Excess payment due to mistake
• Refunds to International tourists of GST paid on goods in India and carried abroad at the time of their departure from India
• Refund on account of issuance of refund vouchers for taxes paid on advances against which, goods or services have not been supplied
• Refund of CGST & SGST paid by treating the supply as intra-State supply which is subsequently held as inter-State supply and vice versa
• Thus, practically every situation is covered. The GST law requires that every claim for refund is to be filed within 2 years from the relevant date.