Para 2 - SITUATIONS WHERE REFUNDS WOULD ARISE - Report on - Business Processes for GST on Refund Process - [August 2015]

SITUATIONS WHERE REFUNDS WOULD ARISE: 2.0 In the taxation administration, refund refers to any amount that is due to the tax payer from the tax administration. In the present taxation system it is considered as a strained area, both for the taxpayer and the tax administration. So in order to establish an effective and efficient tax administration system it is essential that issues on which refund arises ought to be kept at minimum and be clearly defined in the law. Since GST is going to subsume many of the existing taxation laws such as Central Excise, Service Tax, VAT, CST, etc., the situations under which refund arise under these laws are as follows: (A) Excess payment of tax due to mistake or inadvertence. (B) Export (including deemed export) of goods/services under claim of rebate or Refund of accumulated input credit of duty/tax when goods/services are exported. (C) Finalization of provisional assessment. (D) Refund of Pre deposit for filing appeal including refund arising in pursuance of an appellate authority s order (when the appeal is decided in favor of the appellant). (E) Payment of duty / tax during investigation but no/ less liability arises at the time of finalization of investigation / adjudication. (F) Refund of tax payment on purchases made by Embassies or UN bodies. (G) Credit accumulation due to output being tax exempt or nil-rated. (H) Credit accumulation due to inverted duty structure i.e. due to tax rate differential between output and inputs. (I) Year-end or volume based incentives provided by the supplier through credit notes. (J) Tax Refund for International Tourists Each of the situations mentioned above are being discussed hereunder individually for better appreciation of the issue and the proposed process to handle them under the proposed GST regime: