Concept Note on Refund of Integrated Tax Paid on Account of Zero rated supplies Released

The Central Government recently issued a concept note on refund of Integrated Tax paid on account of zero rated supplies under the Goods and Services Tax (GST) regime.

Under GST, Exports and supplies to SEZ are zero rated as per section 16 of the IGST Act, 2017.  Zero Rated Supplies refers to items that are taxable under GST but the Rate of Tax is Nil. The concepts of Zero Rated Supply are covered under Section 16 of the IGST Act. This is in contrast with exempted supplies, where only output is exempted from tax but tax is suffered on the input side. The essence of zero rating is to make Indian goods and services competitive in the international market by ensuring that taxes do not get added to the cost of exports.

Rule 91 of CGST Rules, 2017 provide that the provisional refund is to be granted within 7 days from the date of acknowledgement of the refund claim. An order for provisional refund is to be issued in Form GST RFD 04 along with payment advice in the name of the claimant in Form GST RFD 05. The amount will be electronically credited to the claimant’s bank account.

Recently, the Government had clarified that tax refund for the months July and August will be given to the exporters from 10th and 18th of this month. The payment would be in the form of cheques. This is in terms with the decision taken by the GST Council’s last meet held at New Delhi.

A recent CBEC missive had also clarified that for refund purpose, the exporters have declared their bank account details used for the customs purpose instead of one declared in the GST registration form. Though it said that this may not affect the payment of refund, exporters were advised to either change the bank account declared with the Customs to align it with their GST registration particulars or add the account registered with the Customs in the Registration details.

Rule 91 also prescribe that the provisional refund will not be granted if the person claiming refund has, during any period of five years immediately preceding the tax period to which the claim for refund relates, been prosecuted for any offence under the Act or under an earlier law where the amount of tax evaded exceeds two hundred and fifty lakh rupees.


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