26.04.2022- Learn the concept Refund under GST

Learn the concept Refund under GST

GST refund is a process in which, registered taxpayers can claim excess amount if they paid more than the GST liability. They can claim after submitting a refund application with the necessary details in the GST portal. The GST regime has provisions relating to refunds, and it aims at streamlining and standardizing the procedures about refunds under GST. Therefore, a standardized form has been created to make claims for refunds.

Let us understand the said provision through the practical Case Scenario.

Case Scenario

PQR Ltd., a unit in SEZ, received services from various service providers in relation to authorized operations during the month July, 2017. The following details are furnished for the month July, 2017:

S. No. Particulars SEZ Units DTA Unit Tax amount
1. Value of Taxable services used exclusively for authorised operations within SEZ 5,00,000 exempted
2. Value of inward supply of taxable Services used by both units 7,00,000 GST paid @18%
3. Value of inward supply of taxable Service used by DTA unit 4,00,000 GST paid @18%
4. Export Turnover of SEZ Unit 1,50,00,000
5. Turnover of DTA Unit 80,00,000

Compute the refund amount to be applied by SEZ unit, if any?

Solution:

PQR Ltd. is eligible for the refund of unutilized ITC used by the SEZ unit for authorized operations.

The amount of input tax credit generated with SEZ unit is:-

S. No. Particulars SEZ Units DTA Unit Tax detail Tax amount associated for SEZ unit only
1. Value of Taxable services used exclusively for authorised operations within SEZ 5,00,000 exempted
2. Value of Taxable Services used in 7,00,000 GST paid @18% =7,00,000*18%*1.5cr/ 2.3cr=82,174/-
3. Value of Taxable Service used in 4,00,000 GST paid @18%
TOTAL ITC with SEZ unit eligible for refund u/s 54 82,174/-

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