Interest on refunds of Input tax Credit or Cash ledger under GST at 6% - Interest on refund in case of exports or zero rated supplies
by Paras Mehra 2.24K
Introduction
The government has finally notified the interest rate on refund under GST at 6% via notification 13/2017 dated 28th June, 2017. As per section 54(12), if any refund is withheld for more than due date, then the government shall be liable to refund the tax along with interest at 6% per annum.
Provisional Refund of 90% tax within seven days
As per GST law, the refund, in case of exports or zero rated supplies, shall be refunded up to 90% within seven days of making the application and the rest 10% shall be issued after making due verification.
Time limit to claim refund under GST
Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in GST RFD 01.
However, a registered person, claiming refund of any balance in the electronic cash ledger may claim such refund in the monthly return furnished.
Refund of input tax credit is allowed only in two cases
As per section 54 of CGST act, the refund of ITC shall be allowed only in the following two cases:
- Zero rated supplies made without payment of tax (I.e. export or supply to SEZ).
- Where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies),
Conclusion
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