Changes w.r.t. sanctioning of refund made vide amendment in the CGST Rules

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On recommendations made in 39th GST Council Meeting held on March 14, 2020 amendment to allow for refund to be sanctioned in both cash and credit in case of excess payment of tax. The CBIC vide Notification No. 16/2020- Central Tax dated March 23, 2020 has amended Central Goods and Services Tax Rules, 2017 (“CGST Rules”) in following manner:

  1. Rule 86 of the CGST Rules- Re-credit of amount paid/ debited in e-credit ledger

Sub-rule (4A) is inserted after sub-rule (4):

“(4A) Where a registered person has claimed refund of any amount paid as tax wrongly paid or paid in excess for which debit has been made from the electronic credit ledger, the said amount, if found admissible, shall be re-credited to the electronic credit ledger by the proper officer by an order made in FORM GST PMT-03.”

  1. Rule 92 of the CGST Rules: Order sanctioning refund
  • Sub-rule (1A) is inserted after sub-rule (1):

“(1A)Where, upon examination of the application of refund of any amount paid as tax other than the refund of tax paid on zero-rated supplies or deemed export, the proper officer is satisfied that a refund under sub-section (5) of section 54 of the Act is due and payable to the applicant, he shall make an order in FORM RFD-06 sanctioning the amount of refund to be paid, in cash, proportionate to the amount debited in cash against the total amount paid for discharging tax liability for the relevant period, mentioning therein the amount adjusted against any outstanding demand under the Act or under any existing law and the balance amount refundable and for the remaining amount which has been debited from the electronic credit ledger for making payment of such tax, the proper officer shall issue FORM GST PMT-03 re-crediting the said amount as Input Tax Credit in electronic credit ledger.”

  • In sub-rule (4) and (5) after “amount refundable under sub-rule (1) ”, “or sub-rule (1A) ” is inserted.
  1. Rule 96 of the CGST Act- Refund of integrated tax paid on goods or services exported out of India

Following explanation is added to clause (b) of sub-rule (10) w.e.f. 23.10.2017:

“Explanation.- For the purpose of this sub-rule, the benefit of the notifications mentioned therein shall not be considered to have been availed only where the registered person has paid Integrated Goods and Services Tax and Compensation Cess on inputs and has availed exemption of only Basic Customs Duty (BCD) under the said notifications.”

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