Treatment of Refunds on Export under proposed GST regime


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Heart fealt credits to author to this article is By Vinod Kaushik, ACA-  Reach me at: [email protected], +91-9953236278


As of now both the Union Govt. as well as the Empowered committee of State Finance Minister is planning hard to roll out GST from 01-04-2016 to make India a common market for goods and services. Recently the Empowered committee has released the draft process for registration,returns, payment and refunds under GST. Out of all this refund is considered as one of the strained area under existing taxation system where almost all the efforts are being put by the taxmann to refuse the assessee for same. In order to make India a truly global economy the refund process under GST has been proposed to be user friendly, less paper work (more information in soft copy) and complete time bound activity. In this article and attempt has been made to decode the procedure of refund arising due to exports including deemed exports under proposed GST regime.

NO duty free inputs for exports under GST:

The precondition of GST is to remove most of the paper work like various concessional forms (C Form, F Form and H Form) for interstate movement of goods. Under the existing law exporter can receive duty free inputs subject to furnishing of form H to his supplier. Now in order to remove the practice of issuance of forms the exporters has to pay the input tax on his inputs or finished goods which are used for export of goods under proposed GST regime. Under the proposed GST regime exports are proposed to be Zero rated which means that the export goods would not suffer any actual tax liability although the inputs for them would be tax paid which would be subsequently neutralized.

Obtain duty paid inputs and claim refund:

This system is well recognized by the committee of state finance minister where the exporter has to pay due taxes on inputs used in supplying the exported goods or services. After making compliance with procedures exporter can get the refund of taxes paid. This concept can be explained with this illustration where M/s ABC has procured certain raw material after payment of GST like other normal dealers and used this raw material to make the final product to be exported. Once M/s ABC establishes the actual export as per GST norms refund of tax paid on input can be granted.

Quick look on the process of refund:

In order to make refund under GST as simple as possible following process is suggested:

  • The IEC details of taxpayer will be captured at the time of issuance of GSTIN and the same can be verified online with DGFT for verifying the correctness of the exporter’s particulars.
  • Linkage between ICEGATE of Customs administration and the proposed GSTN of GST administration may be established so that online verification of the exports can be carried out.
  • Online filing of invoice wise sale / purchase details by the taxpayers’ along with the monthly returns. These details can be linked with the Customs data (for export cases) available with ICEGATE.
  • It is recommended that submission of BRC may not be insisted upon at the time of filing of refund application and post facto verification can be carried out by the tax authorities.
  • Refund of input tax credit on inputs (including input services) can be sanctioned once the input tax credit has been matched from the purchase and sale statements filed by the exporter and supplier respectively.

Deemed export of goods or services:

It is recommended that the deemed export need to be treated on equal footing as export and the similar provision as detailed above for actual exports of goods or services would be applicable. The recipient unit would be eligible for refund of IGST, if it has actually paid IGST at the time of obtaining goods / services from the domestic supplier. In no case, both the supplier and the recipient unit can obtain refund at the same time in respect of the same transaction. The supplier may file a simple refund application along with a Chartered Accountant’s Certificate certifying the fact of non-passing of the GST burden by him, being claimed as refund.

Closing comments:

Under the proposed GST regime technology can play a vital role in determining refund expeditiously. The process outlined in the draft paper has taken care of almost all the issues which were causing delay in the existing process. At the last it is worth to mention that the process outlined above is draft and any suggestion on the same can be given on

By Vinod Kaushik, ACA-  Reach me at: [email protected], +91-9953236278

Disclaimer: Views expressed are strictly personal. The content of this document are solely for informational purpose. It doesn’t constitute professional advice or recommendation. The Author does not accept any liabilities for any loss or damage of any kind arising out of information in this article and for any actions taken in reliance thereon.

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