Introduction of the new refund system:
GST refund online system was launched by the Goods and Service Tax Network of India on 26th September 2019. This system was introduced in accordance with the decision made by the members in the GST Council.
Under the new process, the assessees are now provided with a facility to file the refund application form online. This means that taxpayers can file RFD 01 form online in an easy and convenient manner. Also, it will facilitate the tax officers to process the application online.
Implementation of the new refund system:
The new system has become effective from 26th September 2019. So, all refund applications that are filed before this date will be processed manually as done under the earlier process.
Reason for filing of refund application:
Besides other reasons, the refund application is filed by the assessee mainly due to either of the following reasons:
- The amount of GST is paid in excess of the amount that is actually required to be paid,
- There is any amount of Input Tax Credit that has not been utilized while filing the GST return.
Drawback of the old refund process system:
In the earlier system, the process of refund was done for state and central GST by a single tax authority. But the payment of the amount was done by the authorities of state and central tax departments separately. This resulted in the delay of sharing of the sanction order.
Under the new system, the sanctioned amount is credited directly to the bank account of the assessee through one authority. As soon as the processing is completed by tax officer, the amount is refunded by PFMS (Public Financial Management System).
Procedure for filing refund application under the new system:
- Under the new system, application for refund is filed by the taxpayer online on the GST portal. To file the application, the taxpayer must log in on the GST portal.
- The application is then transmitted online to the respective tax officer and is visible on dashboard of the officer.
- After an appropriate decision is made by the tax authority, the amount is credited to the account of the taxpayer.
- The taxpayer must ensure that the bank account number entered in the form is updated and validated by PFMS.
- It is the duty of the proper officer to calculate the amount of refund after receiving the refund application.
- A notice is sent to the applicant if the GST officer is not assured about the amount of refund. This is possible when after scrutinizing the application, the GST officer agrees that the amount of refund is not admissible.
- If refund application is to be rejected, then before rejection applicant must be given an opportunity of being heard.
Benefits of the new system:
- The new system will help to bring transparency between taxpayer and tax authorities.
- It will help to bridge the communication gap between the related parties.
- The procedure of disbursement of refund will take less time now.
- It allows the taxpayers to track the various stages and status of processing of refund application on the GST Portal.
- The assessee can also reply to the notice, if any, on the GST portal.
- At the important stages of processing of refund applications, the assessee will be notified via message or an E-mail.