Key GST Refund Clarifications for Exporters: Circular No. 37/11/2018-GST

02March

Key GST Refund Clarifications for Exporters: Circular No. 37/11/2018-GST

<h2>ey Clarifications on GST Refund for Exporters</h2><h3>1. Refund of Input Tax Credit (ITC) with Drawback Claims</h3><ul><li>As per Section 54(3) of the CGST Act, refund of ITC is not allowed if a supplier avails drawback in respect of central tax.</li><li>However, suppliers claiming drawback only for basic customs duty can still claim a refund of unutilized ITC.</li><li>Refund of State Tax is permitted even if the supplier has claimed drawback of Central Tax.</li></ul><h3>2. Resolving Invoice and Shipping Bill Mismatches</h3><ul><li>Refunds were often delayed due to mismatches between data in GSTR-1, GSTR-3B, and shipping bills.</li><li>The circular clarifies that amendments can be made using Table 9 of GSTR-1 for rectifying errors.</li><li>Refund processing officers should consider amended data in subsequent tax periods.</li><li>If discrepancies exist between GSTR-3B and GSTR-1, the process defined in Circular No. 26/26/2017-GST should be followed.</li></ul><h3>3. Exports Without LUT (Letter of Undertaking)</h3><ul><li>Under Rule 96A of CGST Rules, exports without payment of IGST require an LUT or bond.</li><li>If an exporter made supplies before submitting an LUT, their refund claims should not be rejected.</li><li>The delay in furnishing LUT should be condoned, and export benefits should be granted on an ex post facto basis.</li></ul><h3>4. Exports Beyond the Prescribed Time Limit</h3><ul><li>Rule 96A mandates that goods must be exported within 3 months from the invoice date (for goods) or 1 year (for services).</li><li>If exporters fail to meet this deadline, they are required to pay IGST and claim a refund later.</li><li>However, if goods/services have actually been exported, IGST payment should not be insisted upon, and Commissioners may allow extensions.</li></ul><h3>5. Issuance of Deficiency Memos</h3><ul><li>Refund applications should be acknowledged if they meet the conditions of Rule 89 of CGST Rules.</li><li>If deficiencies are found, a deficiency memo (GST RFD-03) should be issued.</li><li>Only one deficiency memo should be issued per application, and re-submission must be done manually via FORM GST RFD-01A.</li></ul><h3>6. Requirement of Self-Declaration for Non-Prosecution</h3><ul><li>Some tax officers were demanding self-declaration with every refund claim.</li><li>The circular clarifies that such self-declarations are only required when applying for LUT.</li><li>Additional self-declarations for every refund claim are not necessary.</li></ul><h3>7. Refund of Transitional Credit</h3><ul><li>Refund of unutilized ITC is only allowed for:<ul><li>Zero-rated supplies without payment of tax.</li><li>Inverted tax structure cases.</li></ul></li><li>Transitional credit (from pre-GST regime) cannot be included in refund claims, as it pertains to taxes paid under previous laws.</li></ul><h3>8. Handling GST Invoice vs. Shipping Bill Value Differences</h3><ul><li>If the invoice value differs from the shipping bill (export declaration) value, refunds were often delayed.</li><li>The circular directs officers to consider the lower of the two values when processing refunds.</li></ul><h3>9. Filing Frequency of Refund Applications</h3><ul><li>Exporters can choose to file refund claims:<ul><li>Monthly</li><li>Quarterly</li><li>By clubbing successive months/quarters (within the same financial year).</li></ul></li></ul><h3>10. Bank Realization Certificates (BRC) for Export Refunds</h3><ul><li>Export of goods does not require proof of foreign exchange realization.</li><li>Only export of services requires BRC/FIRC for refund processing.</li></ul><h3>11. Supplies to Merchant Exporters</h3><ul><li>Concessional tax rate (0.05% for CGST and 0.1% for IGST) is optional.</li><li>Exporters can choose to procure goods at regular tax rates.</li><li>Goods supplied under concessional rates must be exported under LUT/bond.</li></ul><h3>12. Documents Required for Processing Refund Claims</h3><ul><li>Export of Services with Payment of Tax (IGST Refund):<ul><li>FORM RFD-01A</li><li>Statement 2 (of FORM RFD-01A)</li><li>Invoices of inputs, input services, and capital goods</li><li>BRC/FIRC (for services only)</li><li>Undertaking in FORM RFD-01A</li></ul></li><li>Export (Goods or Services) Without Payment of Tax (Accumulated ITC Refunds):<ul><li>FORM RFD-01A</li><li>Statement 3A (from common portal)</li><li>Statement 3 (of FORM RFD-01A)</li><li>Invoices of inputs and input services</li><li>BRC/FIRC (for services only)</li><li>Undertaking in FORM RFD-01A</li></ul></li></ul><a href="https://cms.plasament.com/storage/shubham-pathak/circularno-37-cgst.pdf">circularno-37-cgst</a>

Key GST Refund Clarifications for Exporters: Circular No. 37/11/2018-GST

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