It's already over six months since the GST was implemented. However, GST return filings are yet to be streamlined. With suspense over continuation of filing of GSTR 2 and 'matching concept' there are high chances that the original design will have a 360 degree change as far as return filing process is concerned.
With the introduction of GSTR 3B which is required to be filed on monthly basis by all taxpayers the government has ensured that it does not have to take a hit as far as collection of tax is concerned.
Further, difficulties in filing GST TRAN 1 have enforced tax payers to postpone the benefit of closing credit of state VAT, excise and service tax. This led to increased cash outflow for taxpayers but has proved beneficial to the government as it has led to increased GST collections.
Non availability of any facility to claim refund of GST on export was like cherry on the cake for the government. Non availability of any facility to claim refund of GST, has caused extreme hardship to the exporters. Approx Rs. 65,000/- crores was blocked in GST refunds till October 2017. The said amount was blocked as refund of duty paid export was linked with filing of GSTR 1 which was disabled till mid December. On representation from various trade and export associations representing exporters a new form 'GSTR 1E' was introduced by the government on 28th October.
'GSTR 1E' was in effect Table 6A of GSTR 1 with a twist. Now, exporters were able to file 'Table 6A/GSTR 1E' without filing GSTR 1. This facility is now disabled (from 29th December) as now taxpayers have the facility to file GSTR 1.
Hence, presently refund on duty paid exports can be claimed after filing of GSTR 1.
In GST, export of goods is a zero rated supply i.e. there should not be any tax incidence on the transaction. Exporters have an option to either –
Export of goods without payment of duty- In this scenario, exporters are eligible to claim refund of unutilized input tax credit apportioned to such exports.
Export of goods with payment of duty- In this scenario, exporters should first pay the GST on the sale value. Such payment can be done by utilizing input tax credit. Thereafter, claim refund of GST which is paid on sale value.
Most of the exporters who have both domestic and export operations opt for the second options as the first option requires a lot of documentation as they have to prove that unutilised input tax credit is related to exports.
Further, the procedure to claim refund in first option is manual whereas in the second option refund can be claimed through the portal itself.
In this article, we will look at the conditions for claiming refund of GST on duty paid exports of goods.
Conditions for claiming refund-
1. Filing of GSTR 3B
2. The amount of IGST paid through GSTR 3B should be more than or equal to refund amount claimed
3. Filing of GSTR 1
4. Table 6A should have details of shipping bill and port code i.e. claims will not be processed if details of shipping bill and port code are not furnished in GSTR 1
5. Shipping bill filed by the exporter will be deemed as application of refund.
6. The export manifest filed by the person in charge of the conveyance carrying such goods should cover such shipping bills
7. Once the shipping bill details in GSTR 1 is matched with the shipping bill details available with custom authorities the refund will be processed.
Since the process of claiming refunds now includes matching with GSTR 1, accurate and timely filings of GSTR 1 have become very important for exporters. It should be noted that in GST a return once filed cannot be revised. Errors can be rectified through amendment in next period's return. Hence, any rectification will delay the refund process by almost a month.
Further, if due date of GSTR 1 is missed it cannot be filed until and unless the due date of filing of GSTR 2 for that tax period has lapsed.
Exporters might have to look beyond free offline utility provided by CBEC and invest in robust return filing softwares like SahiGST to ensure timely filings of returns.
1. Non availability of shipping bill number-
It might happen that details of shipping bills are not available while filing GSTR 1. In such cases, details of export invoices shall be furnished without shipping bill details. Once the shipping bill details are available the entries pertaining to such invoices should be amended in the subsequent month.
2. Incorrect Shipping Bill Number-
As the shipping bill is considered as deemed application of refund. Its details furnished in GSTR 1 against export invoice should match with the details of export invoices furnished in shipping bill. If there is an error in it the same should be rectified by way of amendment in GSTR 1 in next month.
3. Invoice Number and IGST paid amount mismatch-
Details of IGST paid against a particular invoice should match with the details furnished in shipping bill.
4. EGM Error-
Many shipping lines were filing Export General Manifest manually leading to non availability of EGM information. One needs to ensure that shipping lines they are dealing with should file EGM online.
Linking the refund process with GSTR 1 filing has