GST Refund Clarification Dated 10th June 2020

PRATIK PATEL | Last updated: 17 June 2020

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Quick Summary

The CBIC has issued a clarification on GST refunds concerning Input Tax Credit (ITC). Initially, all availed ITC, including that from missing invoices and specific categories like RCM, ISD, and Imports, was eligible for refund. A subsequent circular restricted refunds for ITC not reflected in GSTR-2A, causing issues for RCM, ISD, and Imports. The latest clarification dated 10th June 2020 reinstates the previous practice, allowing refunds for ITC related to RCM, ISD, and Imports even if not in GSTR-2A, while other ITC must be reflected in GSTR-2A.

Recently the Central Board of Indirect Tax and Customs (CBIC) has issued a clarification related to Refund of ITC under form GSTR 2A.

We'll quickly go through the history of in brief.

IN BEGINNING:

The refund was being granted in respect of all credits availed.
The credit availed also includes the missing invoices (not reflected in GSTR-2A) which were uploaded by applicant in refund application on GST Portal.
The applicant was also able to avail credit in respect of RCM, ISD, Imports, etc., since these are also not reflected in GSTR-2A.

GST Refund Clarification: ITC for RCM, ISD, Imports

ISSUANCE OF CIRCULAR NO. 135/05/2020 (DATED 31st MARCH 2020):

The circular has restricted the ITC of missing Invoices (i.e. the invoices or ITC not reflected in GSTR-2A)
This enabled the sanctioning authorities to reject refund against all ITC not reflecting in GSTR-2A (including ITC of RCM, ISD, Imports, etc.)
This created an unfair situation for applicants, as the ITC related to RCM, ISD, Imports although not reflected in GSTR-2A but the same has to be refunded.

ISSUANCE OF CIRCULAR NO. 139/09/2020 (DATED 10th JUNE 2020):

In view of above problem related to rejection of ITC Refund in respect of RCM, ISD, Imports, etc. the CBIC has issued this circular.
This circular (dated 10th June 2020) has clarified the treatment of ITC related to RCM, ISD, Imports, etc. will continue the same as it was before issue of circular no. 135/05/2020 dated 31st March 2020.
In simple words, the ITC related to RCM, ISD, Imports will be allowed for refund even though the invoices of same has not been reflecting in GSTR-2A.
And, the ITC related to Invoices (other than RCM, ISD, Imports) should be reflected in applicants GSTR-2A for availing the refund of same.