Circular No.ES/10/2020-21 3rd April, 2020
To: Members of the Council
Sub.: Clarification on refund related issues
We would like to inform you that CBIC has issued Circular No. 135/05/2020 – GST dated 31st March, 2020 clarifying the following issues related to GST refunds-
Bunching of refund claims across Financial Years.
Refund of accumulated Input Tax Credit (ITC) on account of reduction in GST Rate.
Change in manner of refund of tax paid on supplies other than zero rated supplies.
Guidelines for refunds of Input Tax Credit under Section 54(3).
New Requirement to mention HSN/SAC in Annexure ‘B’.
CBIC has received various representations from Members of Trade seeking clarification on the issues relating to GST refunds.
In order to clarify these issues and to ensure uniformity in the implementation of the provisions of law, CBIC has clarified the following issues:
Bunching of refund claims across Financial Years–
Restriction on clubbing of tax period across different financial years has been removed. Now, taxpayers can claim refund by clubbing different months across successive Financial Years.
Refund of accumulated input tax credit (ITC) on account of reduction in GST Rate–
Refund of accumulated ITC under inverted duty structure due to reduction in rate of tax would not be applicable in cases where the input and the output supplies are the same.
Change in manner of refund of tax paid on supplies other than zero rated supplies–
Any refund of tax paid on supplies other than zero rated supplies will now be admissible proportionately in the respective original mode of payment i.e. in cases of refund, where the tax to be refunded has been paid by debiting both electronic cash and credit ledgers (other than the refund of tax paid on zero-rated supplies or deemed export), the refund to be paid in cash and credit shall be calculated in the same proportion in which the cash and credit ledger has been debited for discharging the total tax liability for the relevant period for which application for refund has been filed.
Guidelines for refunds of accumulated ITC under Section 54(3)–
Refund of accumulated ITC shall be restricted to the ITC as per those invoices, the details of which are uploaded by the supplier in FORM GSTR-1 and are reflected in the FORM GSTR-2A of the applicant. Therefore, refund of any input tax credit not reflecting in GSTR-2A would no longer be available as refund.
New Requirement to mention HSN/SAC in Annexure ‘B’–
Statement of invoices to be submitted with application for refund of unutilized ITC in Annexure B (attached) is modified to include HSN code which is mentioned on the inward invoices.
For more information, members may kindly make a note of the Circular No. 135/05/2020 – GST.
Members may kindly make a note of the above clarifications