Seeks to clarify certain refund related issues

Last updated: 16 July 2021

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This notification from the CBIC addresses common issues encountered when claiming GST refunds, particularly for recipients of deemed export supplies. It clarifies that recipients of deemed export supplies can claim a refund of tax paid, even if they haven't debited their electronic credit ledger. This aims to ensure consistent application of GST refund rules across all tax formations.

CBEC-20/23/03/2020-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing

New Delhi, Dated the 12th March 2021

To,
The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/
Commissioners of Central Tax (All)
The Principal Director Generals/ Director Generals (All)

Madam/Sir,

Subject: Clarification on refund-related issues – Reg.

Various representations have been received seeking clarification on some of the issues relating to GST refunds. The issues have been examined and to ensure uniformity in the implementation of the provisions of law across the field formations, the Board, in exercise of its powers conferred by section 168 (1) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”), hereby clarifies the issues detailed hereunder:

2. Clarification in respect of refund claim by recipient of Deemed Export Supply

2.1 Representations have been received in respect of difficulties being faced by the recipients of the deemed export supplies in claiming refund of tax paid in respect of such supplies since the system is not allowing them to file refund claim under the aforesaid category unless the claimed amount is debited in the electronic credit ledger.

2.2 Para 41 of Circular No. 125/44/2019 – GST dated 18/11/2019 has placed a condition that the recipient of deemed export supplies for obtaining the refund of tax paid on such supplies shall submit an undertaking that he has not availed ITC on invoices for which refund has been claimed. Thus, in terms of the above circular, the recipient of deemed export supplies cannot avail ITC on such supplies but when they proceed to file refund on the portal, the system requires them to debit the amount so claimed from their electronic credit ledger.

2.3 The 3rd proviso to Rule 89(1) of CGST Rules, 2017 allows for refund of tax paid in case of a deemed export supply to the recipient or the supplier of deemed export supplies. The said proviso is reproduced as under:

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FAQ :

The notification aims to clarify certain issues related to GST refunds to ensure uniform implementation of the law across all tax formations.

The notification clarifies issues concerning refund claims by recipients of deemed export supplies.

Recipients were facing difficulties claiming refunds because the system required them to debit the claimed amount from their electronic credit ledger, which contradicted existing guidelines.

The notification clarifies that recipients of deemed export supplies can claim a refund of tax paid without necessarily debiting the amount from their electronic credit ledger.

Previously, recipients had to submit an undertaking stating they had not availed Input Tax Credit (ITC) on invoices for which a refund was claimed.

This clarification has been issued by the Central Board of Indirect Taxes and Customs (CBIC) under the powers conferred by the CGST Act, 2017.