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GST Refund-Online Processing

GST Refund-Online Processing

by Sanjeev Archak

The Government of India has been introducing changes to the GST law to make it more user friendly. As a part of this measure we have seen a simplified return scheme (you can read about  changes here https://integrabooks.co/changes-in-gst-law-return-filing-including-annual-returns/) being introduced from April 2020.

Another significant measure is the introduction of online processing of GST refunds. GST refunds have been a major contention for exporters ever since the introduction of GST. There were problems of jurisdiction of tax payers and huge paperwork to be filed for refunds. (You read about manual refunds here https://integrabooks.co/manually-file-gst-refund/)

In a significant process  improvement, a new online refund processing system has been announced to be begin from 26th September 2019. The changes introduced are as follows:

  1. . Refund applications filed by the taxpayers in RFD-01 form shall be processed electronically/ online by the tax-officer and all communications between the tax officers and the taxpayers shall take place electronically. 
  2. Refund amount shall be disbursed by accredited bank of Central Board of Indirect Taxes and Customs (CBIC) through the Public Financial Management System (PFMS) after bank account validation.

The details of changes in various forms are illustrated below in the tables:

Form RFD-01
Description  Refund Application
Action by Taxpayer
Previous Processing Workflow The taxpayers were filling refund application in form RFD-01A online. 
Electronic/ Online Processing  1.The RFD-01A form has been disabled on the portal.
2.The taxpayer shall be able to file his refund application in form RFD-01 now.
3.However, the taxpayer shall be able to view the status of RFD-01A applications also along with the new ones.
4.The bank account details mentioned in the refund application shall be validated by PFMS after filing of RFD-01. The taxpayers must ensure that the bank account details selected in the refund application are valid and correct.
5.The taxpayer shall be able to view the status of bank account validation
on his dashboard. It will also be communicated through e-mail/ SMS. 

 

Form RFD-02
Description  Acknowledgement
Action by Tax Officer
Previous Processing Workflow The tax officer issued RFD-02 manually.
Electronic/ Online Processing  1.The tax officer shall issue RFD-02 electronically to the taxpayer.
2.The taxpayer shall be able to view the acknowledgement in RFD-02 on his dashboard.
3.The taxpayer will also receive communication through email and SMS. 

 

Form RFD-03
Description  Deficiency Memo
Action by Tax Officer
Previous Processing Workflow The tax officer issued RFD-03 manually and there was no auto recredit
of ITC/cash.
Electronic/ Online Processing 

1.The tax officer shall issue RFD-03 electronically to the taxpayer.
2.With the issuance of RFD-03, the ITC/ cash will get re credited to the electronic credit/ cash ledger of the taxpayer.
3.The taxpayer shall be able to view the deficiency memo in RFD-03 on his dashboard.
4.Once RFD-03 has been issued against an ARN, the taxpayer is required to file a fresh refund application.
5.The taxpayer will receive communication through email and SMS. 

 

Form RFD-04
Description  Provisional Refund Order
Action by Tax Officer
Previous Processing Workflow The tax officer issued RFD-04 manually.
Electronic/ Online Processing  1.The tax officer shall issue RFD-04 electronically to the taxpayer.
2.The taxpayer shall be able to view the provisional sanction order in RFD-04 on his dashboard.
3.The taxpayer will receive communication through email and SMS. 

 

Form RFD-05
Description  Payment Order
Action by Tax Officer
Previous Processing Workflow The tax officer issued RFD-05 manually and sent a copy to the central  nodal authority and state AAs respectively for disbursement.
Electronic/ Online Processing  1.The tax officer shall issue RFD-05 electronically to the taxpayer.
2.The tax officer is not required to send the copy of RFD-05 to the central nodal authority and state AAs.
3.The taxpayer shall be able to view the payment order in RFD-05 on his dashboard.
4.The bank account details mentioned in the refund application shall be validated by PFMS after issuance of RFD-05 by the tax-officer.
5.The taxpayer will receive communication through email and SMS.

 

Form RFD-06
Description  Final Refund Sanction/Rejection Order
Action by Tax Officer
Previous Processing Workflow The tax officer issued RFD-06 manually.
Electronic/ Online Processing  1.The tax officer shall issue RFD-06 electronically to the taxpayer.
2.The taxpayer shall be able to view the final sanction/ rejection order in  RFD-06 on his dashboard.

 

Form RFD-07B
Description  Withholding Order
Action by Tax Officer
Previous Processing Workflow The tax officer issued RFD-07B manually.
Electronic/ Online Processing  1.The tax officer shall issue RFD-07B electronically to the taxpayer.
2.The taxpayer shall be able to view the withhold order in RFD-07B on his dashboard.
3.The taxpayer will receive communication through email and SMS.

 

Form RFD-08
Description  Show Cause Notice
Action by Tax Officer
Previous Processing Workflow The tax officer issued RFD-08 manually.
Electronic/ Online Processing  1.The tax officer shall issue RFD-08 electronically to the taxpayer.
2.The taxpayer shall be able to view the show cause notice in RFD-08 on his dashboard.
3.The taxpayer is expected to give reply to the SCN within 15 days of
receipt of the SCN.
4. If the taxpayer doesn’t respond within 15 days of the issuance of SCN, the tax officer can take action on the refund application.
5.The taxpayer will receive communication through email and SMS.

 

Form RFD-09
Description  Reply to Show Cause Notice by the Taxpayer
Action by Taxpayer
Previous Processing Workflow The taxpayers were submitting reply to the show cause notice manually  to the tax officer.
Electronic/ Online Processing  1.The taxpayer is required to reply the SCN electronically/online in RFD-09 form which would be available on his dashboard.
2.The taxpayer shall be able to reply to the SCN and upload supporting documents electronically through RFD-09.
3.The tax officer may not process the reply to the SCN if not given electronically in RFD-09 by the taxpayer. 

 

Form RFD-09
Description  Order for Re credit of Rejected Amount
Action by Tax Officer
Previous Processing Workflow The tax officer uploaded the refund order details in RFD-01B and then the ITC got re credited to the taxpayer’s ITC ledger.
Electronic/ Online Processing  1.The tax officer shall issue PMT-03 electronically.
2.With the issuance of PMT-03, the inadmissible ITC shall get re credited to the electronic credit ledger of the taxpayer automatically.
3.The taxpayer is required to give an undertaking that he will not file an appeal against the refund order if he/she desires to get a recredit of the rejected amount. This undertaking has to be submitted to the tax officer manually.
4.The taxpayer shall be able to view the recredit order in PMT-03 on his  dashboard.

Now the tax payers will be able to view the various stages of processing of their refund claims. Communication between the GST department and tax payers are now through email/SMS which is welcome move.

The disbursement of refund will now be done by a single authority.Earlier the state and the central government used to disburse the refunds separately. 

Final Thoughts

Online GST refund processing is a major relief for tax payers. The earlier process relied on too much paper work and manual processing  of claims. Hope this new workflow proves beneficial to tax payers.

 

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