GST Refund – Export of Services
Vikash Kumar Surana
Vikash Kumar Surana is a Qualified Company Secretary, Associate Member of CISI UK, and Founder of THE FINOPS Services (est. 2017). With 15+ years of expertise in indirect taxation (GST, Excise, VAT, DGFT, MSME subsidies like PLI, RODTEP), he specializes in tax strategy, litigation, and compliance across industries like manufacturing, ports, steel, and healthcare.
Introduction
Under India’s Goods and Services Tax regime, service exports are treated as zero-rated supplies. This means that exporters are not required to pay GST on their exported services, and they can request a refund of input tax credit or unutilized GST paid on inputs and input services used to deliver such exports. This reimbursement system guarantees that Indian service exporters remain globally competitive by avoiding the inclusion of taxes in the price of their services.
Eligibility for GST Refund: To be eligible for a GST refund on the export of services, the following key conditions must be met:
- Exporter Status: The supplier must be registered for GST and export services outside of India.
- Zero-Rated Supply: The export of services is treated as zero-rated, which means no GST is payable but input tax refunds can be claimed.
- Payment in Convertible Foreign Exchange or INR (where permitted): The consideration for exported services must be received in convertible foreign exchange or INR, as permitted by RBI regulations.
- No Place of Supply in India: Both the beneficiary of services and the place of supply must be located outside of India.
- Documentation: Valid tax invoices must be issued. Bank realization certificates (BRC/FIRC) indicating receipt of payment in foreign currency must be available.
- Return Filing Compliance: The exporter must have filed all applicable GST returns (GSTR-1 and GSTR-3B).
Two Refund Options:
- Without paying taxes (LUT/bond), you will receive a refund for any unused input tax credit (ITC).
- With payment of tax: refund of IGST paid on export.
GST Refund Appeal:
When to Appeal:
- This section outlines the taxpayer’s right and the time limitation to file an appeal if your refund claim is rejected.
- According to Section 107 of the CGST Act, you have the right to challenge the refund rejection.
- You must file an appeal within three months after receiving the rejection order (RFD-06).
- Late appeals can be granted with a valid explanation during a one-month grace period (with condonation).
How to file the appeal:
- Prepare your documents: Gather all relevant documents, including the refund rejection order (RFD-06), invoices, payment proofs (e.g., FIRC/BRC), LUT/Bond copies (where applicable), and a written explanation of your disagreement with the rejection.
- Log into the GST Portal: Visit the official GST portal and log in using your GST credentials.
- File Appeal Form: Complete Form GST APL-01 by providing your GSTIN, order number, and cause for appeal.
Upload all supporting documentation in PDF format. - Send in and Receive an Acknowledgment: An acknowledgment number is issued to track the progress of your appeal.
Refund-related appeals are free of fees. - Attend Hearing if Needed: If requested, present your case at a hearing, either in person or virtually.
- Await Decision: After reviewing, the authority will issue an order. The outcome will be communicated to you via the portal.
Filing Refund After Appeal Order – How to File RFD-01 Again:
When you win an appeal and the authority approves your refund claim (fully or partially), you must re-file the refund application on the GST site to get the refund.
How to File RFD-01 After an Appeal:
- Log in to the GST portal:Go to www.gst.gov.in and log in using your GST credentials.
- Go to Refund: To apply for a refund, navigate to Services, then Refunds, and finally Application.
- Choose the Correct Refund: Select “Refund on account of Order by Appellate Authority” (or a similar phrase). This option only applies to cases when a refund is granted following an appeal order.
- Enter the Appeal Order Details: Fill in the Appeal Order Number and Date specified in the appellate authority’s order (for example, GST APL-01).
- Attach a scanned copy of the appeal order (in PDF format).
- File a Refund Application: Complete the remaining sections of Form RFD-01, including the tax period, the claimed amount, and bank account information. Submit online using DSC or EVC.
Why All This Matters in GST Refund Appeals:
Properly filing a GST refund appeal is crucial to ensure the recovery of blocked working capital, which supports the smooth operation of your business’s cash flow. Exporters, tiny enterprises, may face financial strain if refunds are unfairly denied.
The appeal process gives you a legal right to challenge wrong orders and correct mistakes made by tax officers. You can safeguard your company from needless losses, guarantee equitable tax treatment, and steer clear of fines and future conflicts by adhering to the proper appeals process. It is necessary to protect your operational stability and financial interests.
Common Reasons for GST Refund Rejection:
Documentation that is inaccurate or lacking:
- FIRC/BRC for export payment proof is missing.
- No legitimate tax invoices were found.
- LUT/Bond paperwork that are incomplete (for zero-rated suppliers).
Data Mismatch:
- Disparities between information submitted in the refund application (RFD-01), GSTR-1, and GSTR-3B.
- Invoice discrepancies between refund claims and returns.
Non-Filing of Returns:
- If GSTR-1 or GSTR-3B is not filed for the applicable period, refunds are denied.
Late Refund Application Submission:
- Refund requests must be submitted within two years of the applicable date; any that are submitted after that time will be denied.
- ITC ineligible Claims for refunds on ineligible input tax credits, such as those related to personal expenses or motor vehicles, are common.
Inaccurate Refund Amount Calculation:
- Rejection may result from incorrect formula application or mistakes in calculating the eligible refund amount.
Conclusion:
The GST refund for service exports is a significant benefit to Indian service exporters. Exports are zero-rated under GST law, which means that exporters are exempt from paying GST on their services. Businesses can claim a refund for taxes spent on inputs and input services used to provide the exported service, lowering their overall tax burden.
Exporters must submit their refund applications online via the GST portal using Form RFD-01. Timely filing is critical because refund claims must be submitted within two years of the applicable date. This mechanism ensures that Indian exporters remain competitive on a global scale by lowering costs and increasing cash flow.
For any clarifications or queries, please feel free to reach out to us at admin@fintracadvisors.com
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