Detailed Guide about GST Refund of Excess Tax Paid (2024)

Claiming Refunds wherever eligible is important for Businesses, which also maintains the balance & keep GST fair in all forms.

Under the GST Regime, multiple measures are often taken to help the Businesses and taxpayers comply better & to make the processes simpler.

Now, what is refund under GST? The same is the case withGST Refunds. The processes are systematized & customized as per each individual situation.

In this article, we have covered the entire process & requisites to claim the GST of the extra taxes paid by the taxpayer.

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In multiple situations, this may happen that taxpayers calculate the wrong Tax Amount, pay the Taxes under wrong heads, or pay extra GST than their actual liability.

In such cases, the taxpayers can claim the GST refund of the excess tax paid. A series of steps need to be followed by the taxpayer to claim the refund on excess tax paid.

There can be multiple possibilities for this to happen. Under various circ*mstances, excess GST can be erroneously paid by the Taxpayer.

The bottom line is that if the taxes paid by the taxpayer are not required due to any reason he can claim the refund for it & he must get the excess taxes back.

GST is refundable or not? Is that quetion you are asking ? Let's have look into some situations below.

A taxpayer can make the mistake of paying extra taxes under numerous situations as per GST refund rules. As taxes are mostly filed manually by accountants or CAs manual errors are common.

Additionally, taxpayers also pay the taxes in advance, also called as advance taxes.

If the excess tax is not utilized to release the GST Liability, say because there were no transactions, then the taxpayer must get a refund of the excess taxes paid.

Stated below are the most common scenarios of excess payment of tax under gst where you can claim a refund-

1. Wrong GST Head- (Refund of wrongly paid GST) If you pay the tax under the wrong GST heads- CGST, SGST, IGST you can claim a refund of the tax & repay them under the correct GST head, by filing the relevant GST Returns.

2. Erroneous calculation of tax amount- Accountants may calculate incorrect tax amount while filing Form GSTR-3B which may lead to excess tax payment.

3. Incorrect GSTIN- Business Owners having multiple Businesses under one PAN, can erroneously enter incorrect GSTIN while GST filing& paying taxes. This can result in the payment of wrong GST refund amount.

4. Advance tax payment- In the case where a taxpayer pays GST on an advance that he received for a transaction that subsequently got canceled, the supplier can claim a refund for it under 'Excess Tax Paid'

5. Refund for Casual Tax Payers- Casual taxpayers are dealers who do not have a specific place of supply & who supply taxable goods & services occasionally only. CTPs make temporary registrations & are obliged to pay advance tax at the time of registration. After the payment of all the GST of the registration period, if there is any excess tax left then the CTP can claim it under 'Excess Tax Paid'.

6. Refund of Late fees, interests & penalties- You can also claim a refund of erroneously paid Late fees, interests & penalties under the 'Excess Tax Paid' header.

These are some of the most commonly occurring cases of refund on excess tax payment. But there may be other scenarios as well, for any such situation where the GST refund of the excess tax paid, you need to opt for 'Excess Tax Paid' while filing the Refund Application Form.

You must know the basic requisites & eligibility criteria in GST refund section before you file the refund application to claim refunds of the extra taxes you paid.

Following is the Eligibility Criteria for you to claim a refund under the head 'Excess Tax Paid'-

1. Taxpayer type- You must be Regular, Casual, or a Non-residential Taxpayer to file the refund application.
2. Tax filer type- As mentioned above, you should be a regular filer of Forms- GSTR-3B (Main Return for Regular Taxpayers), GSTR-4 (Main Return for Casual Taxpayers) & GSTR-5 (Return for Non-residential Taxpayer)
3. The refund amount must be more than Rs. 1000.

Given below are the Requisites that you must note while or before filing a GST return filing form-

1. If the refund amount exceeds Rs. 2 Lacs then you must validate your form by a CA & attach a CA certificate with the refund form while filing.
2. You must file a refund form for one tax period only. Clubbing of tax periods while filing the refund form is not allowed.
3. You must attach four documents with your refund form each one not exceeding 5MB in size.
4. The refund amount must be less than the tax amount paid in that taxpayer.
5. Regular Filing of Returns- You must be regular filer of the main & monthly return forms, in order to claim a refund.

Additionally, a Time Frame has been specified for claiming the GST payment process-

1. You can claim the refund anytime from the date of payment up to two years from the date of payment.
2. And if the Tax Official is satisfied with the return application form & the documents attached he may release the refund within 60 days from the date of refund application.

Simply filing the GST refund application will not be enough while claiming the GST refund of the excess tax paid.

You will also have to attach the relevant documents along with the GST refund application Form.

To claim the GST Refund on Excess Tax Paid, you must file the form GST RFD-01 & attach the supporting documents with the form while submitting it.

If the refund amount is more than Rs. 2 Lacs then, you must get your form verified by a CA & attach a certificate given by the CA along with the refund application.

As for the required documents, varying with the cases, the supporting documents are variable also.

You must be aware of what documents you need to attach that may be required by the refund sanctioning authorities since it is a self-declared form.

In the case where you get the refund application verified by the CA, you can take their input as well on what supporting documents can be attached.

Basically, you can attach, Challans, Credit Notes and Debit Notes, & receipt or copy of relevant GSTR Filings for that tax period.

If the refund application is deficient in documents or any other detail, then you will receive a deficiency memo in the form of GST RFD-03.

You can rectify the refund application or attach the documents requested by the Refund Sanctioning Officials.

Read related article:

GST Refund - How To Claim Online on Excess GST?

Once you have an understanding of all the requisites, supporting documents, eligibility criteria & conditions under which you can claim the GST Refund on Excess Tax Paid, you can file the refund application.

The refund application is formed through Form GST RFD-01 on the common GST Portal by the Taxpayer. You will receive the refund in your Electronic Cash Ledger, in the bank accounts registered in the GST Portal.

Here is how you can file the application for GST refund on excess tax paid-

1. Login to the GST Portal, with the GSTIN eligible for refund.
2. Go to Services > Refunds > Application for Refunds
3. Select the header 'Excess Payment of GST'
4. Select the Financial Year & Month from the drop-down list
5. Click on 'Create'
6. Form GST RFD-01 will be displayed
7. Enter the values of taxes that you need to be refunded in Table 'Details of Excess Payment of Tax'
8. Select the Bank Account Number from the drop-down list
9. From the 'Add Documents' tab, you can attach the supporting documents
10. Then click on 'Save'
11. To download the form in PDF Form click on 'Preview'
12. Click on the 'Undertaking & Self-declaration' checkbox
13. Then click on 'Proceed'
14. Select the 'Declaration' checkbox in the next window
15. Select an 'Authorized Signatory' from the drop-down list
16. Click on either FILE WITH EVC or FILE WITH DSC
17. Then in case of DSC, select the certificate & click on SIGN button
18. And in the case of EVC, enter the OTP & click on Verify button
19. A message indicating successful filing will appear on the screen
20. The ARN will be downloaded as well as will be sent to your registered e-mail ID & Mobile Number.