Guidance on GST Refund Forms RFD-01 and Related Procedures

Form RFD-01 is a crucial document for individuals and businesses seeking Goods and Services Tax (GST) refunds for various situations. The process for claiming GST refunds varies depending on the specific circumstances. This guide outlines the purpose, content, structure, filing deadlines, and essential requirements for Form RFD-01.

Recent Updates on GST Refunds

As per CGST Notification 12/2024, issued on July 10th, 2024, individuals seeking a refund of additional integrated tax resulting from a price increase in exported goods (where the initial refund was already processed) are permitted to file Form RFD-01 electronically. This application must be submitted within two years from the specified relevant date under Section 54. If the relevant date occurs before the implementation of this sub-rule, the application window is two years from the sub-rule's effective date, subject to Rule 10B provisions.

Understanding RFD-01 and RFD-01A

Under the Goods and Services Tax (GST) regime, any taxpayer can initiate a refund claim using Form RFD-01 via the official GST portal. Form RFD-01A, which served as an offline application, is no longer in use. A refund is typically processed only when the claimed amount exceeds Rs. 1,000.

Form RFD-01 facilitates the online processing of GST refunds. It is electronically filed on the GST portal for various refund scenarios, including:

• Taxes, cess, and interest paid for zero-rated supplies (excluding goods exports with tax payment).
• Remaining excess cash deposited in the electronic cash ledger.
• Unused Input Tax Credit (ITC) accumulated in the electronic credit ledger due to an inverted duty structure.
• Overpayment of tax resulting from the cancellation or termination of a service supply agreement.

Form RFD-01A was a temporary equivalent of RFD-01, designed for manual refund processing until the online system became fully operational for specific cases.

To file a refund application, taxpayers must access the GST portal, navigate to the 'Refund' tab, and select 'Application for Refund'. After choosing the refund type and inputting the necessary information (often using an offline Excel tool), the application is submitted, generating an Application Reference Number (ARN). The tax officer is expected to process the refund within 15 days of the application date. The central, state, or Union Territory tax authority responsible for processing the refund will be indicated in the Acknowledgement Form RFD-02 or RFD-03.

Eligibility for Filing RFD-01 or RFD-01A Applications

Typically, the supplier of goods or services is entitled to claim an Input Tax Credit (ITC) refund for exports made without tax payment, except in cases of deemed exports and supplies to Special Economic Zones (SEZs). Any taxpayer may also seek a refund for an excess cash balance in their electronic cash ledger or for taxes overpaid due to an error. Furthermore, an unregistered individual can claim a refund for excess tax paid if an agreement or contract for service supply is canceled or terminated. For deemed exports and SEZ supplies, either the recipient or the supplier can apply for a tax refund. However, for a single deemed export invoice, both parties cannot claim the refund simultaneously. If the supplier initiates the refund claim, they must obtain a declaration from the recipient confirming that the recipient will not claim a refund for that specific supply.

Refund Scenarios Where RFD-01/01A is Applicable

Form RFD-01 is used to process various types of GST refunds, including:

• Integrated Goods and Services Tax (IGST) paid on zero-rated supplies, such as service exports with tax payment and supplies to SEZ units or developers.
• Input Tax Credit (ITC) claims for goods or services exported under a Letter of Undertaking (LUT) or bond, without tax payment.
• Refund claims for deemed exports, which can be filed by either recipients or suppliers.
• Refunds arising from an inverted duty structure, where the tax rate on inputs exceeds that on output supplies.
• Excess balances present in the electronic cash ledger.
• Taxes paid in error.
• Refunds granted due to assessment, provisional assessment, appeal decisions, or other official orders.
• Taxes initially paid for intrastate supplies that are later reclassified as interstate supplies, or vice versa.
• Miscellaneous refund cases, which must be clearly specified during the application process.
• Refunds for unregistered taxpayers.

Cases Exempt from RFD-01 and RFD-01A Filing

Forms RFD-01 or RFD-01A are not required for certain refund claims, specifically:

• Exports of goods that are subject to export duty.
• Goods exports where IGST has been paid, as the shipping bill itself serves as the refund application.
• Instances where the supplier benefits from a drawback scheme for CGST/SGST/IGST paid on their supplies.
• Claims made by the United Nations, foreign embassies, or other specifically notified entities.
• Applications by casual taxable persons or non-resident taxable persons.

Essential Conditions for Claiming a Refund

For refund claims related to tax paid or accumulated Input Tax Credit (ITC) on zero-rated supplies and deemed exports (without output tax payment), applicants must have filed their GSTR-1 and GSTR-3B for the relevant month when such supplies occurred. It is crucial to accurately complete GSTR-1, specifically Table 6A for exports, Table 6B for supplies to SEZ units or developers, and Table 6C for deemed exports. Similarly, GSTR-3B must be correctly filled in Table 3.1(b) and consistently align with GSTR-1. Discrepancies between these returns can significantly delay refund processing. Applicants should also retain a comprehensive list of all invoices supporting the refund claim.

According to Notification No. 26/2022, an unregistered person seeking a GST refund due to excess tax paid from a canceled or terminated service contract must provide the following documentation:

1. A detailed statement of invoice information, including invoice number, date, value, and tax paid.
2. Copies of all relevant invoices.
3. Evidence of payment made to the supplier.
4. A copy of the applicable agreement, registered agreement, or contract.
5. The cancellation or termination letter issued by the supplier.
6. Proof and details of any payments received from the supplier related to the agreement's cancellation or termination.
7. A certificate from the supplier confirming:
   • Payment of tax for the invoices on which the refund is sought.
   • No adjustment of tax liability through a credit note.
   • No current or future claim for a refund on the tax amount for these invoices.

In specific scenarios, a certificate from a Chartered Accountant or Cost Accountant may also be required.

Filing Timeline and Frequency for RFD-01

Refund claims using Form RFD-01 must be submitted within two years from the relevant date.

For the following situations, RFD-01 is required to be filed monthly:

• Claims for zero-rated supplies.
• Claims related to an inverted duty structure.
• Claims concerning deemed exports.
• Refunds for an excess balance in the electronic cash ledger.

It is permissible to file a single RFD-01 application covering multiple tax periods, provided these periods fall within the same financial year.

For goods supplied to SEZ units or developers, the supplier should file this form after a designated officer of the SEZ confirms the receipt of goods. Similarly, for services rendered to SEZ units or developers, the supplier must file once a specified officer of the zone authenticates the evidence of service receipt.

If an unregistered taxpayer is seeking a refund, the two-year filing deadline is calculated from the date the contract's cancellation letter was issued.

Structure of Forms RFD-01 and RFD-01A

Form RFD-01 is divided into distinct sections:

• Basic form (comprising serial numbers 1-10)
• Declarations and verification
• Annexure-1
• Annexure-2

Each component is further elaborated below:

Basic Information Section

1. GSTIN/Temporary ID: The unique identification number assigned.
2. Legal Name: The official name of the entity.
3. Trade Name: Any operational trade name, if applicable.
4. Principal Place of Business Address: The registered address of the primary business location.
5. Tax Period: The specific period for which the refund is being claimed (if relevant).
6. Refund Amount: Specify the amounts for IGST, CGST, SGST, interest, or cess, as appropriate.
7. Grounds for Claim: Select the reason for the refund from the provided list.
8. Bank Account Details: The account where the refund will be credited. This information is pre-filled from registration data; any changes require updating the registration details first.
9. Documentary Evidence: Indicate "Yes" if documentary evidence is required in Annexure-1 for the selected refund ground; otherwise, select "No."
10. Verification: An authorized individual must sign this section, confirming the accuracy of all provided information and declarations.

Points 1, 2, 3, and 4 are automatically populated on the GST portal.

The format for RFD-01A was similar but had fewer refund grounds, and fields for bank details and self-declaration (points 8 and 9) were absent.

Declarations and Verification

For specific refund claim types, taxpayers are required to make declarations. These declarations serve to affirm that the tax burden rests solely with the claimant and that no other party will pursue the same refund.

Annexure-1

Various statements serving as documentary evidence must be completed or provided for different refund categories. Form RFD-01 includes 11 distinct statements tailored for various refund applications. It is important to note that if the refund amount is less than Rs. 2 lakh, documentary evidence is not mandatory; a self-declaration confirming that the recipient of goods or services is not claiming the ITC benefit will suffice. For further information on the specific statements applicable to each refund type, refer to the Declaration and Annexures to be submitted with the refund application page.

Annexure-2

A certificate issued by a Chartered Accountant or Cost Accountant must be appended to the RFD-01/RFD-01A refund application. Additional details regarding the required certificate can be found on the Declaration and Annexures to be submitted with the refund application page.

Calculating the Refund Amount

Typically, the refund amount consists of the tax, interest, or cess paid as per the tax invoice. If invoice details, including those for exports, are amended, the refund will be calculated based on the revised value.

For accumulated Input Tax Credit (ITC) refunds, two specific formulas are applied. Only a proportional amount of accumulated ITC can be claimed, aligning with the ratio of turnover from zero-rated or inverted-rated supplies to the taxpayer's total turnover for the relevant period.

1. Zero-Rated Supplies Without Tax Payment (Under LUT/Bond)

The formula for calculating the ITC refund amount is: Net ITC x [(Turnover of zero-rated supply of Goods + Turnover of zero-rated supply of Services) / Adjusted Total Turnover] (for the relevant period).

Where:

• Net ITC: Input tax credit claimed on inputs and input services during the applicable period.
• Turnover of zero-rated supply of goods: This is the lower value between:
  • The value of goods supplied during the relevant period without tax payment by executing a bond or Letter of Undertaking.
  • 1.5 times the value of similar goods sold domestically by the same or a comparable supplier, as declared.
• Turnover of zero-rated supply of services: The value of services supplied during the relevant period without tax payment by executing a bond or Letter of Undertaking. For zero-rated services, turnover includes advances received in a prior period for services now rendered, minus advances received for services yet to be provided in the current period.
• Adjusted total turnover: The total turnover within a state or Union Territory, encompassing zero-rated and non-zero-rated service supplies, but excluding the value of exempt supplies for the relevant period.
• Relevant period: The specific period for which the refund claim is submitted. This period varies depending on the type of refund.

2. Inverted Duty Structure (Input Tax Rate Exceeds Output Tax Rate)

The formula for calculating the maximum ITC refund amount is: [Net ITC x (Turnover of inverted rated supply of goods and services / Adjusted total turnover)] - Output tax payable on the inverted rated supply of goods and services

Where:

• Net ITC: Input tax credit claimed on inputs used for supplying inverted-rated goods and services during the relevant period.
• Turnover of inverted rated supply of goods and services: The turnover attributed to supplies of goods and services that fall under the inverted duty rate category.
• Adjusted total turnover: The total turnover within a state or Union Territory, including zero-rated and non-zero-rated service supplies, but excluding the value of exempt supplies for the relevant period.
• Output tax payable on the inverted rated supply of goods and services: The tax liability for the relevant period on supplies of inverted-rated goods and services.

Distinction Between RFD-01B and RFD-01W

Form RFD-01B, known as 'Refund order details,' provides a summary of the refund orders issued upon the conclusion of the refund process. Conversely, Form RFD-01W is utilized by an applicant to formally withdraw a previously submitted refund application.

Post-Filing Procedures for Refund Applications

Following the submission of an RFD-01 application, an automatic debit entry for the claimed refund amount will be recorded in the applicant's electronic credit ledger. It is advisable to retain this debit reference number.

Within 15 days of receiving the application, the GST officer will review it for completeness. Should any declarations or annexures be missing, the officer will inform the claimant via Form RFD-03, requesting a new application. This scrutiny process, however, does not apply to refund claims for balances in an electronic cash ledger.

Upon successful application, an acknowledgement in Form RFD-02 will be generated on the GST portal, displaying the Application Reference Number (ARN), the refund claim period, and the RFD-01 filing date. The GST officer is then required to issue an order sanctioning the refund claim within 60 days from the date of receiving the complete RFD-02 application.

Determining the Sanctioning GST Officer for Refunds

The specific GST officer responsible for processing a refund is indicated on the applicant's RFD-02. While either the central or state tax authority can handle the processing of all GST taxes (IGST, CGST, and SGST/UTGST), the actual refund payment is disbursed by the respective central tax authority for IGST/CGST and the state tax authority for SGST/UTGST. To facilitate this, the GST officer who issues the refund order may communicate with the relevant central, state, or Union Territory tax authorities to initiate payment within seven working days of issuing the order.