Clarification on GST Refund Related Issues

The Central Board of Indirect Taxes & Customs (CBIC) through a circular dated 17th November 2021 has issued a clarification on GST refund-related issues. The CBDT has received various representations from taxpayers and stakeholders seeking clarification on certain issues relating to refunds.

With this circular, the CBIC has provided clarity on multiple aspects concerning the refund of excess balance in cash ledger, including the time limit for filing applications, refund of TDS/TCS balance in cash ledger, and the certification requirements. For a deeper understanding of the GST refund process, explore our GST Refund Process Guide.

Synopsis of CBIC Circular

CBIC clarified that the time limit for filing refund applications specified in sub-section (1) of section 54 of the CGST Act does not apply to cases of refund of excess balance in electronic cash ledger.
Certification/declaration for not passing the incidence of tax to any other person is not required in cases of refund of excess balance in the electronic cash ledger. Learn more about the documents required for GST refund.
The refund of TDS/TCS deposited in an electronic cash ledger that remains unutilized can be claimed as an excess balance in the cash ledger. For more information on this, visit GST refund for excess payment of tax.

CBIC Clarification on Time Limit for Filing Refund Application

As mentioned, CBIC clarified that the prescribed time limit for filing refund applications concerning section 54(1) of the Goods and Services Tax (GST) Act is inapplicable for refunds due to excess balance in the electronic cash ledger.

Section 54(1) of the CGST Act

Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed:

Provided that a registered person, claiming refund of any balance in the electronic cash ledger following the provisions of sub-section (6) of section 49, may claim such refund in the return furnished under section 39 in such manner as may be prescribed.

Section 54(1) of the CGST Act allows any person who has paid any tax and interest, if any, to apply for a refund. For a comprehensive guide, refer to the GST Refund Eligibility in India Complete Guide.

Application for refund should be made before the expiry of two years from the relevant date. The two-year limit does not apply to claims due to excess balance in the electronic cash ledger.
In the case of a taxable person claiming a refund of any balance in the electronic cash ledger, it can be claimed in the return furnished under section 39. For insights on GST refunds, see Understanding GST Refund Process Benefits.

CBIC Clarification on Requirement of Certificate

With this circular, CBIC clarified that certification or declaration under Rule 89(2)(l) or 89(2)(m) of CGST Rules, 2017 is not necessary for refund applications of excess balance in electronic cash ledger. Get detailed info on the Clarification on GST Refund Related Issues.

CBIC Clarification on Refund of TDS/TCS Deposited in Electronic Cash Ledger

Refund of TDS/TCS deposited in the electronic cash ledger under sections 51 or 52 of the CGST Act can be refunded as excess balance in the cash ledger. It is not mandatory for the registered person to utilize the TDS/TCS amount solely for discharging tax liability. Registered persons can choose to discharge their tax liability from the electronic credit ledger or electronic cash ledger based on their preference and availability. They are free to claim a refund of TDS/TCS in the electronic cash ledger. For a detailed procedure, refer to Efficient GST Refund Solutions with IndiaFilings.

CBIC Clarification on the Relevant Date for the Refund of Tax Paid on Supplies

Clause (b) of Explanation (2) under section 54 of the CGST Act is used to determine the relevant date for a refund of the tax paid on the supply of goods deemed as exports, regardless of whether the refund claim is by the supplier or recipient. The tax on such supplies is paid by the supplier in his return; hence, the relevant date for filing the refund claim is the date of filing of the return for such supplies by the supplier. Explore more on this topic at GST Refund for Exports of Services.

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Frequently Asked Questions

Common questions about GST Refund Clarification.

The purpose of this CBIC circular is to provide clarification on various issues related to the refund of excess balance in the cash ledger under the Goods and Services Tax (GST) system. It addresses concerns and queries raised by taxpayers and stakeholders regarding refund procedures and requirements.

No, the CBIC has clarified that the time limit of two years for filing refund applications, as prescribed in Section 54(1) of the CGST Act, is not applicable in cases of refund of excess balance in the electronic cash ledger.

No, the CBIC has clarified that the certification or declaration under Rule 89(2)(l) or 89(2)(m) of the CGST Rules, 2017, is not required to be furnished along with the application for refund of excess balance in the electronic cash ledger.

Yes, the CBIC has clarified that the refund of TDS/TCS (Tax Deducted at Source/Tax Collected at Source) deposited in the electronic cash ledger under the provisions of Section 51/52 of the CGST Act can be claimed as a refund of excess balance in the cash ledger.

No, it is not mandatory for the registered person to utilize the TDS/TCS amount credited to their electronic cash ledger solely for discharging tax liabilities. They have the liberty to discharge their tax liabilities either through debit in the electronic credit ledger or through debiting the electronic cash ledger, as per their choice and availability of balance in the respective ledgers.

The CBIC has clarified that Clause (b) of Explanation (2) under Section 54 of the CGST Act is applicable for determining the relevant date in respect of a refund of the amount of tax paid on supplies regarded as deemed exports, irrespective of whether the refund claim is filed by the supplier or the recipient.

As the tax on supplies regarded as deemed exports would be paid by the supplier in their return, the relevant date for filing a refund claim for the refund of tax paid on such supplies would be the date of filing of the return related to such supplies by the supplier.

No, this circular specifically addresses issues related to the refund of excess balance in the cash ledger under the GST system. It does not cover all aspects or scenarios related to GST refunds.

Yes, the clarifications provided in this circular are applicable to all registered persons under the Goods and Services Tax (GST) system, regardless of the type of business or industry.

For more information or clarification on GST refund-related issues, you can refer to the official website of the Central Board of Indirect Taxes and Customs (CBIC) or consult with a qualified GST professional or expert.