Process for Claiming GST Refunds on Supplies to Special Economic Zone Units

Businesses making supplies to Special Economic Zone (SEZ) units or developers have two primary methods for managing Goods and Services Tax (GST) implications. These include either paying the applicable tax and then seeking a refund, or making supplies without tax payment, as they are considered zero-rated. For the latter, taxpayers often utilize a Letter of Undertaking (LUT) to claim refunds for accumulated Input Tax Credit (ITC). This guide outlines the detailed procedures for both refund application scenarios.

GST Refund Process with Tax Payment

Step 1: Access the GST Portal

Begin by logging into the official GST portal.

Step 2: Choose the Appropriate Refund Category

Navigate to the Services tab, then select 'Refunds', followed by 'Application for Refund'. From the displayed options, choose 'On account of supplies made to SEZ unit/SEZ developer (with payment of tax)' and proceed by clicking 'Create Refund Application'.

Step 3: Specify Financial Year and Tax Period

Select the relevant financial year and tax period for which the refund is being sought. It is crucial to note that refund applications must be submitted sequentially. If this is your first refund application, the portal might prompt you to file 'Nil' returns for preceding tax periods. If you agree to file a Nil return using EVC or DSC, you will not be able to file any other returns for those periods subsequently.

Step 4: Utilize Offline Utility for Data Entry and JSON Upload

Access the refund screen for 'ITC refund on account of supplies made to SEZ unit/SEZ developer (with tax payment)'. Verify that the claimed IGST and cess refund does not exceed the amount reported in Form GSTR-3B for the same period.

Download the offline Excel utility and input the required data into Table 4. This includes supply details such as GSTIN, return period, serial number, invoice specifics (number, date, value), goods or services classification, and optional shipping bill information. Ensure these details align with your GSTR-1 filing for the corresponding period.

After data entry, click 'Validate and Calculate' to identify any errors. The utility will display the record count; confirm to proceed. Correct any detected errors, such as missing or invalid data, until the error column is clear.

Once validated, click 'Create File to Upload' to generate and save a JSON file on your system.

Next, upload this JSON file to the portal. Select the option for uploading details of SEZ supplies with tax payment, click the 'Click here to upload' button, and locate your saved JSON file. A confirmation message will appear, allowing you to download unique invoices. Select the declaration checkbox and click 'Proceed'.

The system will prompt for confirmation to proceed with the refund application. Click 'Proceed' again. You can then use the 'Validate Statement' option to check for errors. A successful validation will display a confirmation message. If errors are present, download the invalid invoices, rectify them in the offline utility, delete the previously uploaded statement, and re-upload the corrected JSON file.

At this juncture, you can review your Electronic Liability Ledger. To return to the application, use the 'Go Back to Refund Form' option. If there are pending liabilities, the refund will be processed after adjustment. Saved applications remain on the portal for 15 days before automatic deletion, requiring a new application.

Step 5: Provide Additional Details

Choose the bank account number for the refund from the provided drop-down menu. If the correct account is not listed, you must update your taxpayer registration details. Upload any necessary supporting documents. Click 'Save' to continue; the application remains accessible on the GST portal for 15 days.

Before final submission, use the 'Preview' option to review all entered information. Once verified, check the 'Declaration and Undertaking' box and submit the application. A confirmation message will acknowledge successful submission.

Step 6: Finalize Filing with Digital Signature (DSC) or Electronic Verification Code (EVC)

To complete the filing, choose between two signing options: 'File with DSC' (Digital Signature Certificate) or 'File with EVC' (Electronic Verification Code). Select an authorized signatory from the provided list. For Company/LLP entities, filing with DSC is mandatory. DSC filing requires attaching a digital signature, while EVC filing necessitates entering an OTP sent to your registered email or mobile number.

Upon successful signing or verification, a confirmation message will appear, and the Application Reference Number (ARN) will be generated as a PDF document.

ITC Refund Process without Tax Payment

Step 1: Access the GST Portal

Log in to the official GST portal.

Step 2: Choose the Refund Category

Navigate to 'Services' > 'Refunds' > 'Application for refund' to view available refund types.

Step 3: Select Refund for Supplies without Tax Payment

Choose the option 'On account of supplies made to SEZ unit/SEZ developer (without payment of tax)' and click 'Create Refund application'. Specify the financial year and tax period for the claim. Remember that refund applications must be submitted chronologically. If this is your first application, the portal may prompt you to file Nil returns for prior periods. Opting 'Yes' will file these Nil returns, preventing future filings for those periods.

Step 4: Input Data via Offline Utility and Upload JSON File

The 'Refund of ITC on account of supplies made to SEZ unit/SEZ developer (without payment of tax)' page will open. Download the offline utility (typically a zipped Excel file). Extract and open this utility to enter the necessary details, which include GSTIN, return period, serial number, invoice specifics (number, date, value), goods or services type, and optional shipping bill details. Ensure consistency with your GSTR-1 filing.

After populating the data, click 'Validate and Calculate'. Confirm the record count. Address any errors related to missing or invalid data, correcting them until the error column is blank.

Then, click 'Create File to Upload' to generate and save the JSON file to your preferred location.

Proceed to upload this JSON file on the portal. Select the relevant upload option for SEZ supplies without tax payment, click 'Click here to upload', and select your saved JSON file. A successful upload message will appear, offering an option to download unique invoices. Mark the declaration checkbox and click 'Proceed'.

Confirm your intention to proceed with the refund application. Use the 'Validate Statement' option to check for errors. If successful, a confirmation message will display. If errors occur, download the invalid invoices, correct them in the offline utility, delete the previously uploaded statement, and re-upload the revised JSON file.

Step 5: Complete 'Computation of Refund to be claimed Statement-5A [rule 89(4)]'

Fill in the details for 'Statement-5A', which calculates the refund amount. This table includes:

• Turnover of zero-rated supply of goods and services (1) (Rs)
• Adjusted total turnover (2) (Rs)
• Net input tax credit (3) (Rs) [auto-populated but editable per Rule 89(4)]
• Maximum refund to be claimed (4) ((1x3)/2) (Rs) The Integrated tax, Cess, and Total fields will be auto-populated with the maximum eligible refund amounts.

Step 6: Input Details for 'Amount Eligible for Refund'

Complete the table titled 'Amount Eligible for Refund'. This section requires:

• Balance in the Electronic Credit Ledger at the end of the period for which GST refund is claimed (1) (Rs)
• Balance in Electronic Credit Ledger at the time of filing of refund application (2) (Rs)
• Refund to be claimed (3) (Rs), which is the lower of:
  • The formula-based refund value from Statement 5A
  • The ITC Ledger balance on the refund application filing date
  • The ITC Ledger balance claimed and available at the end of the tax period for which the refund is claimed You can review the Electronic Liability Ledger at this point. Return to the refund application using 'Go Back to Refund Form'. Applications can be saved and held if there are outstanding liabilities to be settled; the refund order will be adjusted accordingly. Saved applications are retained for a maximum of 15 days on the portal before deletion, necessitating a new application.

Step 7: Provide Further Information

Select the appropriate bank account for the refund from the drop-down list. If your preferred account is missing, you must update your taxpayer registration details. Upload any required supporting documents. Indicate whether you have submitted a bond/undertaking (Form GST RFD-11) and, if so, provide its reference number. Click 'Save' to proceed; the saved application will be available on the GST portal for up to 15 days.

Before final submission, review all details using the 'Preview' option. After verifying accuracy, check the 'Declaration and Undertaking' box and click 'Submit'. A confirmation message will then appear, acknowledging the successful submission.

Step 8: Complete Filing with DSC or EVC

Once the declaration checkbox is marked, a list of authorized signatories will appear. Choose to either 'File with DSC' (Digital Signature Certificate) or 'File with EVC' (Electronic Verification Code). DSC filing is mandatory for Company/LLP entities and involves attaching a digital signature. EVC filing requires inputting an OTP sent to your registered email or mobile number.

Upon clicking 'Sign' (for DSC) or 'Verify' (for EVC), a confirmation message will display, and your Application Reference Number (ARN) will be provided in PDF format.