Presentation on Payment and Refunds mechanism under GST Regime. Covers Chapter IX and X under CGST Rules, 2017, as updated from time to time

1. GST
Payment & Refunds

2. Payment

3. Some terminologies
• Authorised Bank – A bank or a branch of a bank authorised by the
Government to collect the tax or any other amount payable under the Act.
• Electronic Cash Ledger - The electronic cash ledger referred to in Sec 49(1)
• Electronic Credit Ledger - The electronic credit ledger referred to in Sec 49(2)
• Electronic Liability Register – Register reflecting all return related liabilities
referred to in Sec 49(7)

4. Sequence of discharge of Tax and dues
• Every taxable person shall discharge tax and other dues in the following
order
• Self assessed tax and dues related to returns of previous tax period
• Self assessed tax and dues related to returns of current tax period
• Any other amount including demands raised under the Act

5. Relevant forms
• GST PMT-01 – Electronic Liability Register
• GST PMT-02 – Electronic Credit Ledger
• GST PMT-05 – Electronic Cash Ledger
• GST PMT-06 – Challan for deposit of tax
• GST PMT-03 – Order of re-credit in Credit Ledger by proper officer
• GST PMT-04 – Communication of discrepancy in Ledger
• GST PMT-07 – Application for credit of missing payment

6. Heads of payment
Minor Heads
Major Heads
Tax dues can be paid either by utilization of input tax credit or through cash. However, payment of Interest,
Penalty, Fees and Others has to be done through cash only

7. Electronic Liability Register
• Section 49(7) - All liabilities of a taxable person under this Act shall be
recorded and maintained in an electronic liability register in such manner as
may be prescribed.

8. Electronic Liability Register
Debit
• Amount payable towards tax, interest, late
fees or any other amount as per return.
• Amount of demand as determined by
Proper officer
• Amount of tax and interest as a result of
mismatch
Credit
• Payment of tax liability by debiting
electronic credit/ cash ledger
• Payment of TDS, TCS, Interest, RCM
liability, Composition tax liability by
debiting electronic cash ledger
• Relief of demand given by Appellate
authorities
• Amount of penalty in demand order or
SCN paid

9. Electronic Credit Ledger
• Section 49(2) - The input tax credit as self-assessed in the return of a
registered person shall be credited to his electronic credit ledger, in
accordance with section 41, to be maintained in such manner as may be
prescribed.
• Section 49(4) - The amount available in the electronic credit ledger may be
used for making any payment towards output tax* under this Act or under
the Integrated Goods and Services Tax Act in such manner and subject to
such conditions and within such time as may be prescribed.

10. Electronic Credit Ledger
Debit
• Output Tax liability discharged
• Refund of unutilized credit
Credit
• Transitional Credit
• Input credit pertaining to stock held in case
of new registration
• Input credit upon conversion from
Composition scheme
• Input credit on inward supplies from
Registered suppliers
• Input credit from ISD
• Input credit pertaining to RCM liability paid

11. Electronic Credit Ledger – Set-off
Major Heads Sequence/ Order of utilization
IGST IGST CGST SGST/ UTGST
CGST CGST IGST
SGST/ UTGST SGST/ UTGST IGST

12. Electronic Cash Ledger
• Section 49(1) - Every deposit made towards tax, interest, penalty, fee or any other
amount by a person by internet banking or by using credit or debit cards or
National Electronic Fund Transfer or Real Time Gross Settlement or by such other
mode and subject to such conditions and restrictions as may be prescribed, shall be
credited to the electronic cash ledger of such person to be maintained in such
manner as may be prescribed.
• Section 49(3) -The amount available in the electronic cash ledger may be used for
making any payment towards tax, interest, penalty, fees or any other amount payable
under the provisions of this Act or the rules made thereunder in such manner and
subject to such conditions and within such time as may be prescribed.

13. Electronic Credit Ledger
Debit
• Output liability viz. Tax, Interest,
penalty, fee or other payment
discharged
• Refund of balance in cash ledger
Credit
• Amount paid through authorized
bank
• TDS/ TCS claimed in GSTR 2

14. Electronic Credit Ledger – Payment Mode
GST Payment Modes
Online
Payments
Credit/Debit card Internet Banking
Offline
Payments
Over the Counter * NEFT/RTGS

15. Payment Challan
• A specific format used for making payments under the GST regime
• Single challan for SGST/ UTGST, CGST, & IGST payments, including cess
• Challan for making GST Payments are generated online
• Challans can be saved & edited for a maximum of 7 days
• At any point of time, there can be only 10 challans saved
• Once a challan is generated, it is valid for 15 days
• Before generation of Challan, it will be in “My Saved Challans” & after generation it
will be in “Challan History”.

16. Payment Challan

17. Online Payment – E-payment Challan
Taxpayer logs into GST portal & clicks
‘Create Challan’ in the Payments
section under the GST Services menu
1 2 3
On the create challan screen,
Taxpayer enters challan amount
Taxpayer selects E-payment
4
Taxpayer clicks on Generate
Challan & challan with unique
CPIN is generated

18. Online Payment – Internet Banking
Taxpayer selects Net Banking under
modes of E-Payment while generating
challan
1 2 3
Taxpayer selects bank & clicks on
Make Payment
Taxpayer is directed to the
selected bank’s website to
complete the transaction
4
Taxpayer is directed back to GST
portal to the Payment Summary
Page
5
Taxpayer successfully makes
payment on bank’s website
6
Taxpayer can view, download, &
then print challan receipt (CIN)

19. Online Payment – Credit/ Debit Card
Taxpayer selected Credit/Debit Card
under modes of E-Payment while
generating challan
1 2 3
Taxpayer selects Payment
Gateway and clicks Make Payment
Taxpayer is directed to the
payment gateway to complete the
transaction
4
Taxpayer is directed back to GST
portal to the Payment Summary
Page
5
Taxpayer successfully makes
payment through payment
gateway
Taxpayer can view, download, &
then print challan receipt (CIN)
6

20. Offline Payment – Over the Counter Challan
Taxpayer logs into GST portal & clicks
‘Create Challan’ in the Payments
section under the GST Services menu
1 2 3
On the create challan screen,
Taxpayer enters challan amount
Taxpayer selects Over the Counter
& enters bank name
4
Taxpayer clicks on generate
challan & challan with unique
CPIN generated

21. Offline Payment – Over the Counter
Taxpayer has selected OTC mode for
payment less than or equal to INR
10,000 *
1 2 3
Taxpayer selects Cash, DD or Cheque &
selects the remitting bank where payment
will be made
Taxpayer clicks on generate
challan
45
Taxpayer makes payment at the
bank via cash, Cheque or DD
6
Taxpayer can view, download &
then print generated challan
Taxpayer can view, download, &
then print challan receipt once bank
updates GST on success of payment
* N.A. in certain cases

22. Offline Payment – NEFT/ RTGS Challan
Taxpayer logs into GST portal & clicks
‘Create Challan’ in the Payments
section under the GST Services menu
1 2 3
On the create challan screen,
Taxpayer enters challan amount
Taxpayer selects NEFT/RTGS &
enters bank name
4
Taxpayer clicks on generate
challan & challan with unique
CPIN generated along with
mandate form

23. Offline Payment – NEFT/ RTGS
Taxpayer has selected NEFT/RTGS
mode for payment
1 2 3
Taxpayer enters all the details of bank
where payment will be made before
generating challan
Taxpayer clicks on Generate
Challan
45
Taxpayer fills mandate form &
makes NEFT/RTGS payment (via
cheque only)
Taxpayer can view, download, &
then print challan receipt
6
Taxpayer can view and download
generated challan along with
partially auto-filled mandate form

24. Payment – Generated Challan
Unique Common Portal
Identification Number (CPIN)
Challan generation date
Total challan amount
Challan expiration date
Mode of payment

25. Payment – My saved challans
Taxpayer logs into GST portal & clicks
‘My Saved Challans’ in Payments section
under the GST Services menu

26. Payment – Saved Challans/ Challan history
All challans created by the
taxpayer appear in descending
chronological order
Taxpayer edits (generate during
edit)/deletes desired challan
All challans generated/ paid by
the taxpayer appear in descending
chronological order

27. Interest
• Interest on delayed payment
• Every person liable to pay tax under the Act, but fails to pay the tax or part thereof
within the prescribed period, shall, on his own, for the period of default, pay interest @
18% p.a. to be calculated on daily basis.
• Interest if undue or excess claims made
• A taxable person making undue or excess claim of input credit/ undue or excess
reduction in output tax liability shall be liable to pay interest on such claim @ 24% p.a.
to be calculated on daily basis.

28. Refunds

29. Some terminologies
• Zero rated supplies – Supply of goods or services or both towards (a) exports
or (b) to a Special Economic Zone developer or a Special Economic Zone
unit. Sec 16(1) of IGST Act
• Inverted Duty structure - Rate of tax on inputs being higher than the rate of tax
on output supplies
• Relevant date – The date as specified in 2nd explanation to Sec 54(14) of CGST
Act

30. Need for refund??
• GST paid is more than GST liability
• Erroneous payment of GST liability in wrong head
• Excess payment made due to mistake
• Exports/ Deemed Exports/ Supply to SEZ
• Judgment/ Decree/ Order

31. Cases where refund can be claimed
• Exports/ Deemed Exports/ Supplies to SEZ units or developers
• Purchases made by recipients notified u/s 55
• On account of Inverted Duty Structure
• Excess payment made due to mistake
• Refund to international tourists at the time of departure from India
• On account of refund vouchers issued for taxes paid on advances
• On account of Judgement/ Decree/ Order or direction issued by authorities

32. Doctrine of unjust enrichment
• Every person who has paid the tax on goods or services or both under this Act
shall, unless the contrary is proved by him, be deemed to have passed on the full
incidence of such tax to the recipient of such goods or services or both.
• It is thus clear that he has passed on the burden to the recipient and has already
recovered GST from him. In such case, refund of excess GST will amount to excess
and undeserved profit to the supplier as he will get double benefit – first from the
recipient and again from the Government
• Thus, there is no point in applying for refund in such cases.

33. When can the refund be claimed?
• A registered person may claim refund of any unutilised input tax credit at the end of any tax
period – Sec 54(3)
• A registered person, claiming refund of any balance in the electronic cash ledger in accordance
with the provisions of sub-section (6) of section 49, may claim such refund in the return
furnished under section 39 in such manner as may be prescribed – Sec 54(1) proviso
• Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount
paid by him, may make an application before the expiry of two years from the relevant date in
such form and manner as may be prescribed – Sec 54(1)
• A specialized agency, notified u/s 55, entitled to refund of tax, may make an application for such
refund, in such form and manner as may be prescribed, before the expiry of six months from the
last day of the quarter in which such supply was received – Sec 54(2)

34. Relevant forms
• GST RFD-01 – Application for Refund
• GST RFD-02 – Acknowledgment of Refund
• GST RFD-03 – Deficiencies found information by Dept.
• GST RFD-04 – Provisional sanction within 7 days
• GST RFD-05 – Payment advice in conjunction with RFD-04
• GST RFD-06 – Order of sanction after verification
• GST RFD-07 – Order for adjustment/ withhold of refund
• GST RFD-08 – Rejection Order
• GST RFD-09 – Reply to rejection order (within 15 days)
• GST RFD-10 – Refund application by UIN
• GST RFD-11 – Furnishing of Bond/ LUT in case of Export without payment of IGST

35. Process of refund – Export of goods*
• Details of exports with relevant shipping bills to be furnished in Table 6A of
Form GSTR-1
• Details shall be electronically transmitted to the system designated by the
Customs
• Upon furnishing of a valid return in FORM GSTR-3 or FORM GSTR-3B,
as the case may be, the proper officer of Customs shall process the claim
• Refund will be credited electronically to the account of applicant via ECS,
RTGS or NEFT.

36. Process of refund - Others
• Application in Form GST RFD-01 for claiming refund to be filed through the GSTN portal.
• Manual copy of the application along with the acknowledgement number to be submitted to
the jurisdictional officer.
• Adjustment would be made in the electronic Cash ledger or electronic credit ledger by
debiting an amount equal to the refund so claimed
• Refund application and documents submitted shall be scrutinized within a period of 60 days
of filing the refund application.
• If refund claimed exceeds the predetermined amount of refund then it will go through pre-
audit process for sanctioning the refund.
• Refund will be credited electronically to the account of applicant via ECS, RTGS or NEFT.

37. Refund – Ease of doing business
• Where the amount claimed as refund is less than Rs. 2 lakh, it shall not be necessary for the
applicant to furnish any documentary and other evidences but he may file a declaration,
based on the documentary or other evidences available with him, certifying that the
incidence of such tax and interest had not been passed on to any other person.
• The Proper Officer may, in the case of any claim for refund on account of zero-rated
supply of goods or services or both made by registered persons, other than such category
of registered persons as may be notified by the Government on the recommendations of
the Council, refund on a provisional basis, 90% of the total amount so claimed, excluding
the amount of input tax credit provisionally accepted, in such manner and subject to such
conditions, limitations and safeguards as may be prescribed.
• The proper officer shall issue the Order within 60 days from the date of receipt of
application complete in all respects.

38. Refund – Excess in Cash Ledger
• Any claim for refund relating to balance in the electronic cash ledger in
accordance with the provisions of Section 49(6) may be made through the
return furnished for the relevant tax period in FORM GSTR-3 or FORM
GSTR-4 or FORM GSTR-7, as the case may be.
• Since GSTR-3 is in abeyance, the claim is to be submitted after relevant
return for the period i.e. Form GSTR-3B and GSTR-1 has been duly
submitted.
• The claim should accompany a statement showing the details of the amount
of claim on account of excess payment of tax

39. Refund – Supplies to SEZ
• In case of supply of goods, a statement containing the number and date of invoices
along with the evidence regarding the endorsement by the specified officer of the
Zone
• In case of supply of services, a statement containing the number and date of
invoices, the evidence regarding the endorsement by the Specified Officer of the
Zone and the details of payment, along with the proof thereof, made by the
recipient to the supplier for authorised operations as defined under the Special
Economic Zone Act
• A declaration to the effect that the SEZ unit or the SEZ developer has not availed
the input tax credit of the tax paid by the supplier of goods or services or both.

40. Refund – Deemed Exports
• The application may be filed by -
• The recipient of deemed export supplies; or
• The supplier of deemed export supplies in cases where the recipient does not avail of
input tax credit on such supplies and furnishes an undertaking to the effect that the
supplier may claim the refund
• The application should be accompanied by a statement containing number
and date of invoices

41. Refund – Casual Taxable Person
• Refund of any amount, after adjusting the tax payable by the applicant out
of the advance tax deposited by him by a Casual Taxable Person or Non
resident Taxable person at the time of registration, shall be claimed in the
last return required to be furnished by him under Section 39.

42. Refund – Judgement/ Order..
• The reference number of the order and a copy of the order passed by the
proper officer or an Appellate authority or Appellate Tribunal or Court
resulting in such refund or reference number of the payment of the amount
specified in sub-section (6) of section 107 and sub-section (8) of section 112
claimed as refund

43. Refund – Different nature of Supply
• Statement showing the details of transactions considered as intra-State
supply but which is subsequently held to be inter-State supply

44. Refund – Export with payment of IGST
• In case of Export of services
• Refund application in Form RFD-01 along with Statement containing the number and
date of invoices and the relevant Bank Realisation Certificates or Foreign Inward
Remittance Certificates, as the case may be
• In case of Export of Goods
• Refund application through Table 6A of GSTR-1 containing therein, number and date
of shipping bills or bills of export and the number and the date of the relevant export
invoices

45. Refund – Export without payment of IGST
• No refund of unutilised input tax credit shall be allowed in cases where the goods exported
out of India are subjected to export duty or if the supplier avails of drawback in respect of
central tax or claims refund of the integrated tax paid on such supplies.
• In the case of zero-rated supply of goods or services or both without payment of tax under
Bond or Letter of Undertaking, refund of input tax credit shall be granted as per the
following formula
Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services)
x Net ITC ÷Adjusted Total Turnover
Net ITC * - input tax credit availed on inputs and input services during the relevant period
Turnover of zero-rated supply of goods * - Value of zero-rated supply of goods made during the relevant period
without payment of tax under bond or letter of undertaking

46. Refund – Export without payment of IGST
Turnover of zero-rated supply of services - Aggregate of the payments received during the relevant
period for zero-rated supply of services and zero-rated supply of services where supply has been
completed for which payment had been received in advance in any period prior to the relevant period
reduced by advances received for zero-rated supply of services for which the supply of services has
not been completed during the relevant period
Adjusted Total turnover * - Turnover in a State or a Union territory, as defined under clause (112) of
section 2, excluding the value of exempt supplies other than zero-rated supplies
Relevant period - The period for which the claim has been filed
* Adjustment relating to Deemed Exports supplies and Merchant Export Supplies (Not. 48/2017 –
Central Tax and Not. 40/2017 – Central Tax (Rate) resp.) to be done

47. Bond/ Letter of Undertaking
• Any registered person availing the option to supply goods or services for export
without payment of integrated tax shall furnish, prior to export, a bond or a Letter
of Undertaking in FORM GST RFD-11 to the jurisdictional Commissioner,
binding himself to pay the tax due along with the interest specified under sub-
section (1) of section 50 within a period of
• (a) 15 days after the expiry of three months, or such further period as may be allowed by the
Commissioner, from the date of issue of the invoice for export, if the goods are not
exported out of India; or
• (b) 15 days after the expiry of one year, or such further period as may be allowed by the
Commissioner, from the date of issue of the invoice for export, if the payment of such
services is not received by the exporter in convertible foreign exchange.

48. Refund – Inverted Duty Structure
• A statement containing the number and the date of the invoices received and
issued during a tax period pertaining to such case, other than nil-rated or
fully exempt supplies
• No refund in certain cases* – Woven textile fabrics, knotted netting of twine,
cordage of rope, fishing nets or other nets, Corduroy fabrics, Knitted or
crocheted fabrics, certain railway locomotives and their parts, Construction
of Complex

49. Refund – Inverted Duty Structure
• In the case of refund on account of Inverted Duty Structure, refund of
input tax credit shall be granted as per the following formula
Refund Amount = {(Turnover of inverted rated supply of goods and services)x Net ITC
÷ Adjusted Total Turnover} - tax payable on such inverted rated supply of goods and
services.
Net ITC * - input tax credit availed on inputs and input services during the relevant period
Adjusted Total turnover * - Turnover in a State or a Union territory, as defined under clause (112) of
section 2, excluding the value of exempt supplies other than zero-rated supplies.
* Adjustment relating to Deemed Exports supplies and Merchant Export Supplies (Not. 48/2017 –
Central Tax and Not. 40/2017 – Central Tax (Rate) resp.) to be done

50. Refund – UIN
• Any person eligible to claim refund of tax paid by him on his inward supplies
as per notification issued u/s 55 shall apply for refund in form GST RFD-10
once in every quarter, electronically on the common portal, along with a
statement of the inward supplies of goods or services or both in form
GSTR-11.

51. Relevant Date
In case of Relevant Date
Export by Sea/ Air The date on which the ship or the aircraft in which such goods are loaded,
leaves India
Export by Land The date on which such goods pass the frontier
Export by Post The date of dispatch of goods by the Post Office concerned to a place outside
India
Deemed Exports The date on which the return relating to such deemed exports is furnished
Export of Service 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 invoice, where payment for the services had been received in
advance prior to the date of issue of the invoice

52. Relevant Date
In case of Relevant Date
Order/ Judgement The date of communication of such judgment, decree, order or direction
Refund of unutilized input credit End of financial year
Provisional payment of Tax The date of adjustment of tax after the final assessment
Other cases The date of payment of tax

53. Interest
• Where a refund is withheld subject to further appeal or proceeding, the taxable person, if as
a result of the appeal or further proceedings he becomes entitled to refund, shall be entitled
to interest at 6% p.a.
• If any tax ordered to be refunded is not refunded within sixty days from the date of receipt
of application, interest at 6% p.a. shall be payable from the date immediately after the expiry
of sixty days till the date of refund.
• Where any claim of refund arises from an order passed by an Adjudicating Authority or
Appellate Authority or Appellate Tribunal or Court which has attained finality and the same
is not refunded within sixty days from the date of receipt of application filed consequent to
such order, interest at 9% p.a. shall be payable in respect of such refund from the date
immediately after the expiry of sixty days till the date of refund.

54. Refund Process Flow
• Registered person files application in Form GST RFD-01
• If found complete in all respects, Proper Officer acknowledges the application
within 15 days in Form GST RFD-02
• In case deficiencies are noticed, Proper Officer shall communicate the same in
Form GST RFD-03
• In case of Exports, subject to preconditions, the Proper Officer shall make order in
Form GST RFD-04 sanctioning provisional refund. Such payment advice shall be
issued in Form GST RFD-05.
• Post scrutiny of the application, order sanctioning refund is processed in Form
GST RFD-06 along with payment advice in Form GST RFD-05

55. Refund Process Flow
• In case where the amount is completely adjusted against any outstanding demand or if the
Commissioner is of the opinion that the refund is liable to be withheld, order in Form GST
RFD-07 is issued.
• If the Proper officer is satisfied that the whole or any part of the amount claimed is not
admissible or is not payable to the applicant, he shall issue a notice in Form GST RFD-08 to
the applicant for rejection of claim.
• Applicant shall have to reply to the notice within 15 days in Form GST RFD-09
• After hearing the case, the Proper Officer shall, either, make an order
• In Form GST RFD-06 and issue advice in Form GST RFD-05, either to fully or partially credit the
amount in applicant’s bank or the amount to be credited in Consumer Welfare Fund
• In Form GST RFD-08 for rejection of claim

56. Thank You
Manmohan Daga | Daga & Associates | +919804199500 | mmdaga@hotmail.com