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An overview:
The introduction of GST is truly a game changer for Indian Economy as it has replaced multi-layered, complex indirect tax structure with a simple, transparent and technology driven tax structure. Same way, with the concept of GST Refund, more people apply for GST registration to get the benefits of the excess input accumulated. It is very important to understand the GST Provisions related to the complete concept and process of refund. If anyone eligible for refund and wants to claim the same, then it should be applied before the expiry of the time period as time limit is mentioned in the GST provisions for claiming the refund. It facilitates trade through release of the blocked funds for Working capital, expansion, and modernization of businesses.
As per the GST Provisions, every claim for refund is to be filed within 2 years from the relevant date and following dates are recommended as relevant dates for different types of refund cases:
S.N. | Situation of Refund | Relevant Date |
1. | On account of Export of Goods
a) If the goods exported by sea or air
b) If the goods are exported by land
c) If the goods are exported by Post |
the date on which the ship or aircraft in which such goods are located leaves India
the date on which such goods pass the frontier
the date of despatch of goods by the Post Office concerned to a place outside India.
|
2. | On account of Export of Services | the date of i) Receipt of payment in convertible foreign exchange where the supply of services had been completed prior to the receipt of such payment or ii) issue of invoices, where payment for the services had been received in advance prior to the date of issue of the invoice. |
3. | On account where the tax becomes refundable as a consequence of judgement, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court | the date of communication of such judgement, decree, order or direction |
4. | Surplus ITC due to Inverted Tax Structure | Due date of furnishing of return under Section 39 for the period in which such claim for refund arises. |
5. | On account of Tax is paid provisionally under this Act | the date of adjustment of tax after the final assessment |
6. | In any other Case | the date of Payment of Tax |
To understand the refundable element of the GST we firstly need to know the situations which leads to refund. We hereby make a short crux chart in a very simple waycovering all the situations leading to refund along with the refundable element column so you can get all the information at one place:
S.N. | Situation Leading to Refund | Refundable Element |
1. | Export Supplies- IGST Paid | IGST Paid |
2. | Export Supplies- No IGST Paid and ITC availed | Unutilised ITC |
3. | Supplies to SEZ- IGST Paid | IGST Paid |
4. | Supplies to SEZ- No IGST Paid and ITC availed | Unutilised ITC |
5. | Domestic Supplies- Having Inverted Tax Structure | Unutilised ITC |
6. | Supplies to UIN Holder (Special Entities)- GST Paid | GST Paid on Inward Supplies |
7. | Domestic Supplies
a) Intra State supply wrongly categorized as Inter-State supply-IGST paid wrongly
b) Inter State supply wrongly categorized as Intra-State supply- CGSTand SGST Paid wrongly
c) Supply- GST Paid but wrong rate applied
d) Double payment on single supply transaction – due to mistake or inadvertence
e) Advances received- GST Paid- But later on no supply was made |
IGST Paid
CGST and SGST Paid
GST Paid in excess
GST Paid in excess
GST Paid |
8. | Domestic Supplies- Assessee not able to determine applicable rate a) Requested Provisional Assessment and paid @20% b) But afterwards assessment finalised @10% |
GST Paid in Excess (20%-10%) |
9. | Domestic Supplies-GST Paid @12% -Investigation Team came and assessee paid additional GST @16% during the investigation but later on at the time of finalization of Investigation np tax liability or less tax liability arises |
GST Paid in Excess during the time of investigation
|
10. | Domestic Supplies- GST Paid @12% -Return is scrutinized by the department and Officer raised demand notice to pay differential duty @16% -Assessee apply for appeal and pre-deposited the disputed dues -Assessee win the appeal which leads to refund of pre-deposited amount |
GST Pre-Deposited |
11. | GST Paid by International Tourist will be eligible to refund as per Section 15 of the IGST Act | GST Paid by Tourist |
Thereby depending on the situations leading to refund, assesses will apply for following types of refund:
Refund of unutilizedInput Tax Credit (ITC):
As it can be seen from the table that this type of refund is admissible only in 2 cases.
i) First case is when *zero rated supplies*are made without payment of tax. Refund of ITC shall be granted as per the following formula
Refund Amount= Net ITC * (Turnover of Zero rated supply of goods+ Turnover of Zero Rated supply of Services)
Adjusted Total Turnover
ii) Second case is when the supply have *Inverted Tax Structure*. Refund of ITC shall be granted as per the following formula
Refund Amount= Net ITC * (Turnover of Inverted rated supply of Goods and Services)
Adjusted Total Turnover
Less: Tax Payable on such inverted rated supply of goods or services.
Meaning of the terms:
Zero Rated Supply means any of the following supplies of goods or services or both namely:
Inverted Tax Structure means where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (Other than Nil rated or Fully Exempt Supplies)
However, no refund of unutilized ITC shall be allowed where the goods exported out of India are subjected to Export Duty.
Any person availing the option to supply goods or services for export without payment of IGST shall furnish prior to export a bond or a Letter of Undertaking in Form GST RFD-01 to the jurisdictional Commissioner binding himself for :
Refund of GST Paid:
Other than the above 2 cases, all other cases fall under this category where we shall apply for the refund of the GST Paid element. However, no separate application required to be applied in case of export of goods by the exporters. The shipping Bill/Bill of Land filed by an exporter of goods shall be deemed to be an application for refund of IGST paid on the goods exported out of India.
Release of Blocked Funds:
For making supply, every supplier also purchase the goods or take services in order to complete the outward supply. However, the supply and purchase may not occur at same point of time in same tax period. Due to which funds get blocked in the form of GST paid on the purchase and get credited in the electronic ledger. So by applying refund of the same, funds will be released to easily facilitate the trade.
Boost Export Business:
Export is qualified as a zero-rated supply under the GST provisions. Exporters will be eligible to take refund of the GST paid on the inward supplies by making the refund application thereby boosting the business of Export.
Excess Tax Paid:
If inadvertently or mistakenly, excess tax or wrong tax has been paid then you can take refund of the same by making application of refund.
Among all, the first step involved for the process of company incorporation is ascertaining the availability of name. A company is identified through its name it registered on the Ministry of Corporate Affairs. Hence choosing an appropriate name is the important and crucial thing.
For the same, an application will be submitted for the reservation of name to the Ministry of Corporate Affairsby login to the sitehttps://www.mca.gov.in/mcafoportal/login.do and preference wise 2 names along with the business objective can be provided. Once the name gets approved, it’s reserved for 20 days within which applicant needs to complete all the remaining process for the incorporation of the Company.
Stakeholders shall ensure that the proposed name selected does not contain any word as prohibited in Section 4(2) & (3) of the Companies Act, 2013 read with Rule 8 of the Companies (Incorporation) Rules, 2014.Points to be considered while suggesting the name:
-Check Trademark for your proposed name on the site https://ipindiaonline.gov.in/tmrpublicsearch/frmmain.aspx
– Check domain for your proposed name on the site https://www.registry.in/index
-Check the availability of Company Name on the site https://www.mca.gov.in/mcafoportal/viewCompanyMasterData.do
Therefore, choosing an appropriate name which does not prohibit any law will be the most important thing.
There is also another way to finalize the name of company and its incorporation in one go i.e., apply name and company incorporation together. However, if the same has been rejected by the MCA, then all the documentation will be done again
Once the name gets approved in PART A, the basic details will be automatically filled in all linked forms of PART B. There will be total 4 linked forms which will be generated such as AGILE-PRO, Spice+ MOA, Spice + AOA and INC-9. These linked forms will be filled up with the necessary details like capital subscription, name of shareholders and directors, percentage of holding among the shareholders, Interest of shareholders in other entities, etc.
For completion of the Part B, many other details and documents will be required which is discussed as below:
For the E-filing of all the forms, Digital Signature is a mandatory requirement. Digital Signature is in form of digital key containing all the information about the registered signatory like name, address, Contact No, Email ID and the authority detail which has provided the certificate. All the forms will signed digitally by the authorized signatory by proving its identity through the Digital Signature Certificates.
Director Identification Number is a unique identification number of 8 digits for the directors of a Registered Company.Every director will be provided a unique number with which he will be identified by the MCA. To become a director, one shall apply for getting the DIN from the MCA.To applying DIN, the applicant has to make an application in e-Form DIR-3 and shall follow the below mentioned process
This form is for GSTIN, Employees Provident Fund Organization registration, Profession Tax Registration, Opening of Bank Accounts, Shops and Establishment registration.
It is mandatory to register for ESIC, EPFO, Professional Tax (for Maharashtra) and bank account opening to obtain AGILE-PRO via e-form, However, GSTIN Registration is optional for the applicants.
MOA is a document which contains all the fundamental information about the company, the objectives of the company in brief, the share capital, type of Shares whether equity or preference and its shareholders details, details of allocation of shares among the shareholders along with their name, address and occupation, etc. Company can perform and undertake only those activities that are mentioned in the objectives of Memorandum of Association beyond which the company cannot undertake any other objective but the Memorandum of Association (MOA) can be amended with the approval of the shareholders.
As per Section 4 of the Companies Act, 2013, Companies shall form MOA as specified in Tables A to E of Schedule -I of the Act. Below is the list of tables with their meaning:
Table A: Company Limited by shares
Table B: Company limited by guarantee and not having a share capital
Table C: Company limited by guarantee and having a share capital
Table D: Unlimited Company and not having share capital
Table E: Unlimited Company and having share capital
Hence Company shall adopt an appropriate table applicable to it as there are various forms of tables for different companies.
AOA defines the rules and regulations that govern the internal management of the company for achieving its objectives.
Various forms in Tables F to J for different companies have been mentioned under Schedule I of the Companies Act 2013 and AOA must be in the respective form.
Table A: Company Limited by shares
Table B: Company limited by guarantee and having a share capital
Table C: Company limited by guarantee and not having a share capital
Table D: Unlimited Company and having share capital
Table E: Unlimited Company and not having share capital
Declaration shall be given by the subscribers and directors in the form INC-9 that:
Once all the above documents and details are ready, then the application for the incorporation of the company can be made via e-form Spice accompanied by Spice MOA and Spice AOA with the registrar under whose jurisdiction the address of the company is located. All these e-forms need to be affixed by the Digital Signatures of the respective persons.
The Registrar of Companies will grant a Certification of Incorporation along with the Copy of PAN, TAN, EPF, ESIC which will be used as for the identity of the company existence.
Once the company gets incorporated then there are many compliances which need to be performed by the company
The Company within thirty days of its incorporation shall furnish to the Registrar of Company regarding verification of its registered office by filing the e-form INC-22.
INC-22 shall be downloaded from the Ministry of Corporate Affairs site and any of the following document will be attached with this form:
Every Company incorporated shall within 180 days of its incorporation shall file the declaration for the Commencement of the Business with the Registrar of Company. It is the declaration regarding that all the subscribers to the MOA have deposited the total value of the shares agreed to be taken by them in the Company Bank Account. Proof for the same shall be attached while filing the form INC-20A. Bank Statement shall be used as the evidence for the same.
COMPLIANCESPRO has a separate team which is expert in completing this complex process very easily and helps you to get the company registered within 3 daysonly in a very reasonable price.
