You have bought a flat and later, canceled terms with the builder and now, you don’t know what will happen to GST paid on your under-constructed flat. I have a solution for it. Do you know, you can claim a refund from the GST department? In this post, I will discuss every aspect and related FAQs to enable you to easily claim the GST refund as an individual.
The GST Department through CBIC’s Circular No. 188/20/2022-GST dated 27.12.2022, (download PDF) has enabled the feature on the GST portal for the unregistered persons or individuals to file for GST refund on few conditions like cancellation of flat or long-term insurance policy.
Who can file GST refund application:
The said circular has specified the conditions for unregistered person or individual to claim GST refund from the GST department. There are two conditions for which you can claim GST refund:-
- Where the unregistered buyers, who had entered into an agreement/ contract with a builder for supply of services of construction of flats/ building, etc. and had paid the amount towards consideration for such service, either fully or partially, along with applicable tax, had to get the said contract/ agreement canceled subsequently due to non-completion or delay in construction activity in time or any other reasons.
- A situation may arise in cases of long-term insurance policies where premium for the entire period of term of policy is paid upfront along with applicable GST and the policy is subsequently required to be terminated prematurely due to some reasons.
Temporary GST registration for unregistered person:
Even If you have never been registered as a GST taxpayer, you can still claim a refund by taking temporary GST registration. So, first we discuss how to take GST temporary GST registration as an individual.
- Access the https://www.gst.gov.in/ URL. The GST Home page is displayed.
- Click the “Services” menu -> User Services -> Generate UserID for unregistered Applicants. A new window will open up.
- Choose option “to claim refund” and then, proceed for registration with your personal details and active phone no and active email id.
- You will receive the GST user id and password on your email id.
You need a PAN card to file for temporary GST registration. Thereafter, the unregistered person would be required to undergo Aadhaar authentication. Enter a bank account correctly and should be linked with the same name and PAN. Validation of Bank account required to get the GST refund amount directly into your bank account.
Steps to file refund application:
To file the application to claim refund as an unregistered taxpayer, perform following steps:
- Access the https://www.gst.gov.in/ URL. The GST Home page is displayed.
- Login to the GST portal.
- Click the Services > Refunds > Application for Refund command.
- The Select the refund type page is displayed. Select the reason as Refund for Unregistered Taxpayer option.
- Click the CREATE REFUND APPLICATION button.
- The GST RFD-01 – Refund for Unregistered Taxpayer page is displayed.
- Supplier GSTIN, Legal Name of Business and Trade Name will be displayed along with Invoice details and Refund Claimed tables. (Fill all necessary and important details)
- Enter Document details in the Invoice details table and also the amount of Refund to be claimed for Integrated Tax, Central Tax, State/ UT Tax and Cess in table Refund Claimed.
- Select the Account Number from the Select Account Number drop-down list.
- Under section upload Supporting Documents, you can upload supporting documents (if any).
- Enter the Document Description.
- Click the ADD DOCUMENT button.
- Click the Delete button, in case you want to delete any document.
- Accept the Undertaking and Self Declaration statements. Click the PROCEED button.
- To proceed filing a refund application, the taxpayer has to authenticate Aadhar or upload e-KYC documents. In case e-KYC documents have been uploaded and you wish to authenticate Aadhaar, click on NAVIGATE TO MY PROFILE button or click on PROCEED TO FILE button.
- Select the Declaration checkbox.
- In the Name of Authorized Signatory drop-down list, select the name of authorized signatory.
- Click the FILE WITH DSC or FILE WITH EVC button.
- Choose FILE WITH EVC button and you will receive OTP on your registered mobile number. After entering OTP, your application is confirmed and filed online for refund.
:Source of filing GST refund and courtesy to images / screenshot
Note: Correctly enter all the details as shown above, as this can lead to sanction or rejection of your refund claim.
Time limit to file GST refund:
The time limit is considered as per Section 54(1) of the CGST / SGST Act 2017. As per the provision, the refund application is to be filed within two years from the relevant date.
In this, “relevant date” is the date of issuance of a letter of cancellation of the contract/ agreement for supply by the supplier will be considered as the date of receipt of the services by the applicant.
Therefore, the due date will be the two years from the date you get the cancellation letter of the agreement with your buyer. For example, the date of the letter of cancellation of agreement is 01.01.2024, the refund has to be filed within two years i.e., 01.01.2026.
Documents required:
Documents are very important aspects to get you a GST refund. Here is the important list of documents that you need to upload online: –
- upload statement-8 (in pdf format) as well as online. It is a list of invoices which have been canceled.
- upload the certificate issued by the supplier in terms of clause (kb) of sub-rule (2) of rule 89 of the CGST Rules 2017.
- Declaration from the supplier that they could not issue credit notes under Section 34 of the CGST / SGST Act 2017. At the time of cancellation/termination of agreement / contract for supply of services, the time period for issuance of credit note under section 34 of the CGST Act has already expired.
- Invoice copies to prove that you have paid the GST amount.
- Bank Statement to prove that you have not collected the GST amount from the builder.
- Any other documents, if requested by the jurisdictional AC/DC officer.
Note: This list is indicative in nature not exhaustive as the submission of documents totally depends on the jurisdictional AC/DC officer.
GST refund process for unregistered persons:
I list out the process of GST refund done by the GST officers:
- GST refund application in RFD-01 form and received by the jurisdictional AC/DC officer (address where you have taken registration and should be the same state as of your supplier or builder)
- If all documents are uploaded correctly and as per Rules and the said Circular, acknowledgment (RFD-02) is issued by the GST officer, else Deficiency Memo (RFD-03) (means rejected due to documentation) will be issued and then, again you will have to file the GST refund application with all documents. (Time limit is 15 days from the date of filing GST refund application RFD-01)
- If acknowledgment (RFD-02) issued, the GST officer will proceed with further processing of refund claim.
- If required, provisional order (RFD-04) i.e.90% of the refund amount will be sanctioned to you. Or you will be issued a Show Cause Notice (RFD-08) with a personal hearing date and time to appear before the jurisdictional AC/DC officer. (so keep track of the GST refund application status).
- Provisional Refund order (RFD-04) is not mandatory. It depends on the jurisdictional AC/DC officer.
- Your refund has to be decided (whether sanction or rejection) within 60 days from the date of filing the GST application RFD-01 or else interest on delayed sanction of refund will be given by the department.
Note: Do track your application status. Attend a Personal hearing and reply to Show Cause Notice properly else your refund may get rejected.
Other FAQs:
1. Can a refund be filed manually too?
Ans: No, you cannot file any GST refund application manually before any GST office. You have to file a GST refund for the unregistered period as prescribed above.
2. Where or which area to take GST temporary registration?
Ans: As per the said circular, you have to take GST temporary registration in the state where the builder is registered with the GST department. Your address in the registration should be of that state to claim a GST refund.
3. How can I track the status of the application for refund?
Ans: To track your filed application, navigate to gst.gov.in -> Services -> Refunds -> Track Application Status option.
4. Is it mandatory to enter supplier GSTN?
Ans: Yes, you need to enter supplier’s GSTN in order to fill in the details for the Refund to be claimed.
5. Are there any validation rules in the portal for such refunds?
Ans: While filing the refund application, supplier details are required to be entered in the form which will be validated by the system.
6. What is the minimum refund amount to be claimed?
Ans: the minimum refund should be Rs.1000/- or more as CGST and Rs.1000/- or more as SGST. It is treated separately, not cumulatively.
7. What amount will be refunded?
Ans: Only the GST tax amount charged by builder from you, will be refunded not more than that and you have to prove that you have not received GST tax as refund from your builder on cancellation of agreement.
8. If supplier / builder is different, how many GST refund applications will have to be filed?
Ans: for each separately registered supplier or builder, a separate GST refund application has to be filed. If they are registered in different states, you will have to take a different registration in each state to apply for a GST refund.
