Guide for Claiming ITC Refunds on Exports Without Payment of Tax

Introduction

Exporters in India can claim a refund of Input Tax Credit (ITC) on zero-rated supplies, such as exports. This guide provides a detailed, step-by-step process, along with a compliance checklist, to help ensure timely and accurate ITC refund applications, minimizing delays and avoiding defaults.

Key Concepts and Legal Framework

Zero-Rated Supply under GST

• Definition: Exports are considered zero-rated supplies, meaning they are taxed at a rate of 0%.
• Refund Options:
  1. Export under Bond or LUT without paying IGST: Claim a refund of accumulated ITC.
  2. Export by paying IGST: Claim a refund of the paid IGST.
• Importance: This mechanism ensures exporters are not burdened with tax costs, enhancing their international competitiveness.

Relevant Legal Provisions

• Section 149: Allows amendments to shipping bills based on pre-existing documentary evidence.
• Section 154: Permits correction of clerical errors in customs documents.

Step-by-Step Guide for Claiming ITC Refund

Pre-Submission Steps

1. Prepare Required Documents:

   • Commercial Invoice cum Packing List
   • Bill of Lading/Air Way Bill
   • Shipping Bill/Bill of Export
   • Proforma Invoice
   • Export Order/Purchase Order
   • Certificate of Origin
   • Bill of Exchange
   • Letter of Credit
   • Declaration from Sister Concern
   • Bank Realisation Certificate (BRC)
   • Communication Records

2. File GST Returns:

   • Ensure Forms GSTR-1 and GSTR-3B are filed for all relevant tax periods.

3. Compile and Review Turnover and ITC Data:

   • Ensure the accuracy of the turnover of zero-rated supplies and the adjusted total turnover.

Submission Steps

4. Access the GST Portal:

   • Navigate to the GST portal and log in with your credentials.

5. File Refund Application in Form GST RFD-01:

   • Select the correct refund type: "Refund on account of Export of Goods/Services without payment of Tax".
   • Provide the turnover details for the relevant period.
   • The Net ITC in the "Computation of Refund to be claimed" table will be auto-populated. Adjust if necessary, excluding ITC related to capital goods, transitional ITC, and ITC already claimed under specific rules.
   • Ensure the refund claimed does not exceed the balance in the Electronic Credit Ledger.

6. Upload Supporting Documents:

   • Upload all required documents as notified under CGST Rules or Circulars.
   • Ensure the details in the documents match those provided in the refund application.

7. Submit the Application:

   • Review all entries carefully before submitting.
   • Once satisfied, submit the application.

8. Generate Application Reference Number (ARN):

   • After submission, an ARN is generated. Note this number for tracking purposes.

Post-Submission Steps

9. Track Application Status:

   • Use the "Track Application Status" feature on the GST portal to monitor the progress of your refund application.

10. Respond to Queries Promptly:

• If the Refund Processing Officer raises any queries or requests additional information, respond promptly to avoid delays.

11. Consistent Invoicing:

• Ensure that the invoice details in Form GSTR-1 match those in the refund statement (Table 6A of Form GSTR-1).

12. Amend Rejected Invoices:

• If invoices are rejected by the ICEGATE system, correct and amend them in the subsequent Form GSTR-1 filing. Reapply for the refund with the corrected details.

Detailed Compliance Checklist

Before Filing the Refund Application

1. Document Preparation:

   • Ensure all necessary documents are gathered and accurate.
   • Verify shipping details and payment receipts.

2. GST Return Filing:

   • Confirm all GSTR-1 and GSTR-3B returns are filed for the relevant periods.

3. Turnover and ITC Data:

   • Check turnover and ITC data for accuracy and completeness.

During Filing the Refund Application

4. Form GST RFD-01 Completion:

   • Enter turnover and adjusted total turnover.
   • Adjust the Net ITC in the computation table if necessary.
   • Ensure the refund amount does not exceed the balance in the Electronic Credit Ledger.

5. Document Upload:

   • Upload all supporting documents required by CGST Rules and Circulars.
   • Validate that document details match those provided in the refund application.

6. Submission Review:

   • Preview the application in PDF format to check for inconsistencies or errors.
   • Ensure all entries are accurate and complete before submission.

After Filing the Refund Application

7. Tracking and Monitoring:

   • Regularly track the status of the refund application using the ARN.
   • Address any queries or additional information requests from the Refund Processing Officer promptly.

8. Consistent Invoicing:

   • Ensure consistency between Form GSTR-1 and refund statements.

9. Amendment of Rejected Invoices:

   • If invoices are rejected by ICEGATE, amend them in subsequent Form GSTR-1 filings and reapply for the refund.

Additional Points to Remember

• Avoid Clerical Errors:

  • Double-check all entries to avoid clerical errors which can lead to rejections or delays.

• Amendments to Shipping Bills:

  • Make any necessary amendments within 30 days post-shipment.

• Utilize Offline Utility:

  • Use the Download Offline Utility for accurate and bulk entry of document details in Statement 3.

• Maintain Communication Records:

  • Keep a record of all communications with the Refund Processing Officer and any other relevant authorities.

Caution and Compliance Due Dates

• Timely Filing: Ensure all refund applications and related GST returns are filed within the stipulated deadlines to avoid interest or penalties.
• Amendments: Make any amendments to shipping bills or invoices promptly and within the allowed timeframes.
• Responding to Queries: Address any queries from the GST authorities within the given response period to prevent delays in processing.

Conclusion

Claiming ITC refunds for exports without payment of tax involves meticulous documentation, timely filing, and diligent tracking. By following this detailed guidance note and compliance checklist, exporters can efficiently manage their ITC refund claims, avoid penalties, and ensure smooth operations in their international trade activities. Adherence to these steps will help in maintaining compliance and benefiting from the zero-rated supply provisions under GST.