Adjustment of Refund received in earlier years

This query is : Resolved

Dharmender Leel (Querist)
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28 July 2021 I have a real estate company where 1% gst is applicable. The detail of advances received and amount refunded is as under
Advances rcvd 1246000@1%
Less refunds 400000@1% received in 2019-20 & 2020-21 .
Less refunds 200000@12% received in 2018-19.
Balance advances 646000
GstR 1 is showing negative liability if 12 % refund is taken but Gstr 3b is calculating gst on balance figure of 646000@1%.
So plz clarify can I get refund of gst paid on advances @12% received in 2018-19.
and what will be the best procedure.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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06 July 2024 Based on the details provided, here’s a clarification regarding the GST treatment of advances received and refunds in your real estate company:

1. **Advance Received at Different Rates:**
- You received advances at different GST rates: 1% and 12%.

2. **Refunds Made:**
- Refunds were made at these rates:
- 1% refunds received in 2019-20 and 2020-21 totaling ₹400,000.
- 12% refund received in 2018-19 totaling ₹200,000.

3. **Balance of Advances:**
- After deducting the refunds, the balance of advances stands at ₹646,000.

4. **GST Treatment:**
- As per GST rules, when an advance is received for a supply and subsequently the supply is not made, the GST rate applicable on the advance needs to be adjusted based on the actual supply or refund made.
- For advances received at 12% GST rate, if a refund was issued, you should adjust the GST liability accordingly. If GST was paid on the advance but a refund was later issued due to non-supply, the excess GST paid should be adjusted or refunded.

5. **Procedure for Refund:**
- Since you have already adjusted the 1% GST refunds against the advances received at 1%, you should also adjust the 12% GST refund against the advances received at 12%.
- Ensure that in your GST returns (GSTR-1 and GSTR-3B), you correctly reflect the adjustments made for the refunds received in each financial year.
- If the GST paid on advances received at 12% in 2018-19 was not adjusted or refunded, you may apply for a refund of the excess GST paid using the appropriate procedure under GST law.

6. **Consultation:**
- It’s advisable to consult with a GST professional or your tax advisor to ensure compliance with GST regulations and to properly apply for any refunds due.

By following these steps and ensuring accurate reporting in your GST returns, you can manage the GST treatment of advances received and refunds effectively in your real estate business.

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