Government releases draft rules for registration, invoice, payment, return and refund under GST

Transcription

1 29 September 2016 EY Tax Alert Government releases draft rules for registration, invoice, payment, return and refund under GST Executive summary Tax Alerts cover significant tax news, developments and changes in legislation that affect Indian businesses. They act as technical summaries to keep you on top of the latest tax issues. For more information, please contact your EY advisor. This Tax Alert summarizes various drafts rules released by the Central Government in relation to Goods and Services Tax (GST). The Rules pertain to: Registration Invoice Payment Returns Refund Various formats for the above have also been released in public domain. Draft rules deals with the procedure in relation to payment, registration, invoicing, returns and refund under proposed GST law. Comments/representations on the draft rules have been invited by 28 September 2016 which will be discussed and finalised during the meeting of GST Council scheduled on 30 September 2016.

2 Background The Empowered Committee of State Finance Ministers had constituted the Joint Committee to look into the reports of Sub- Group I on business processes for GST. Accordingly, draft GST processes on payment, registration and refund were released on 6 October 2015 in the public domain. After the passage of the Constitutional amendments for GST and, introduction of Model GST law, Government has released draft GST rules on registration, invoicing and payments on 26 September 2016 and on returns and refund on 27 September Stakeholders are required to provide comments before the meeting of GST Council which is expected to be held on 30 September 2016 to discuss and finalise the said rules. The draft rules have been summarised below: GST Registration Rules GST Registration Rules set out procedure for application, verification and issuance of registration certificate. Rule 1 Application for registration Taxable person (applicant) seeking registration will have to declare Permanent Account Number (PAN), mobile number and address in the Part A of Form GST REG 01 on the common portal or through a Facilitation Centre, notified by the Board or Commissioner. Proper officer will use above details to verify the details of the applicant and acknowledge the receipt of an application in Form GST REG 02. Applicant applying as a casual person shall be given temporary identification number (TIN) by common portal for making advance deposit of tax defined under section 19A of Model GST law. Rule 2 Verification of the application examine the application and the accompanying documents. Certificate of registration will be granted within three common working days from the date of submission of application, if the same are found to be in order. If any defect or deficiency is identified in the application or documents, the proper officer will intimate the same to the applicant in Form GST REG-03 within three common working days from the date of submission of the application. The applicant shall be required to correct the defect and furnish clarification or documents sought in Form GST REG 04 within seven common working days from the date of receipt of such intimation. In the absence of provision of required documents, information or explanation by the applicant, intimation of rejection of application shall be provided in Form GST REG 05. Rule 3 Issue of registration certificate: Registration Certificate in Form GST REG 06 for the principal place of business and for every additional place of business shall be provided to the applicant. Rule 4 Separate registration for multiple business verticals within a State Separate application for registration in Form GST REG-01 can be filed for each business verticals. Rule 5 Grant of registration to persons required to deduct tax at source (TDS) or collect at source (TCS) Applicant who is required to deduct tax at source under section 37(1) or collect tax at source under section 43C shall submit an application in Form GST REG 07 for grant of registration. In case the said person is no longer liable to deduct or collect tax at source, the proper officer may cancel the registration and communicate the same to the said person in Form GST REG 08. The application for registration shall be forwarded to the proper officer who shall Rule 6 Assignment of Unique Identity Number (UIN) to certain special entities

3 Every person is required to obtain a UIN under section 19(6) may submit an application in Form GST REG 09. Proper officer shall assign a UIN to the said person and issue a certificate in Form GST REG 06 within three common working days from the date of submission of application. Rule 7 Display of registration certificate and GST Identification Number (GSTIN) in name board Every registered person shall display his certificate of registration and GSTIN in the name board at his principal place of business and at every additional place or places of business. Rule 8 Grant of registration to nonresident taxable person Non-resident taxable person shall apply in Form GST REG 10 at least five days prior to commencement of the business and make an advance deposit of tax equivalent to the estimated tax liability. Rule 9 Amendment to registration If there is any change in any of the particulars furnished in the application form, at the time of obtaining registration, the registered taxable person shall within fifteen days of such change submit an application in Form GST REG 11 along with the documents relating to such change. On satisfaction, the proper officer shall issue an order in Form GST REG 12. Rule 10 Suo moto registration In case any person liable to get registered but failed to apply for the same, the proper officer shall register the said person on a temporary basis and issue an order in Form GST REG 13. the details of closing stock and liability thereon, along with the application, relevant documents in support thereof. Rule 12 Cancellation of registration Proper officer may issue a notice to the applicant in Form GST REG-15 to show cause within seven days as to why the registration should not be cancelled. Proper officer, if satisfied with the reply, may issue an order in Form GST REG 16 to cancel the registration. Rule 13 Revocation of cancellation of registration Taxable person may submit an application to revoke cancellation of registration in Form GST REG 17 within thirty days from the date of service of the order of cancellation of registration. Order for revocation of cancellation of registration shall be issued in Form GST REG-18. Before rejecting the application, an opportunity of being heard shall be provided by issue of notice in Form GST REG 19. Rule 14 Migration of persons registered under Earlier Law The applicant registered under an earlier law and having a PAN shall be granted a registration in Form GST REG 21, on a provisional basis. Such person shall submit an application in Form GST REG 20 along with required information. If the furnished information is not found to be complete, the proper officer shall cancel the provisional registration and issue an order in Form GST REG 22. Rule 11 Application for cancellation of registration For cancellation of registration, a registered taxable person shall submit an application in Form GST REG-4 including A show cause notice shall be issued in Form GST REG 23 for cancelling the provisional registration. Person not liable to be registered under the GST Act, may file an application in

4 Form GST REG 4 for cancellation of provisional registration. Rule 15 Method of authentication All documents required to be submitted under these rules shall be filed electronically with digital signature or through e-signature as specified under Information Technology Act, 2000 or through any other mode as notified. Rule 16 Extension in period of operation by casual taxable person and nonresident taxable person Applicant as a casual person or nonresident taxable person can extend the period of his registration by submitting an application in Form GST REG 25. Rule 17 Physical verification of business premises in certain cases Proper officer may verify the place of business and upload the verification report in Form GST REG 26 on the day following the date of such verification. GST Invoice Rules Rule 1 - Tax Invoice Details are required to be mentioned on the tax invoice issued by the supplier like name, address and GSTIN of the supplier and additionally UID number of registered recipient, HSN code of goods and/or Accounting Code of Services, description of goods and quantity with rate etc. Time period within which the tax invoice needs to be raised is as under: Taxable supply of services - within thirty days from the date of supply of service. Continuous supply of services - within thirty days on completion of each milestone. Supply of service by a banking company or financial institution including NBFC - within forty five days from the date of supply of service. In case of exports, the invoice shall carry an endorsement SUPPLY MEANT FOR EXPORT ON PAYMENT OF IGST or SUPPLY MEANT FOR EXPORT UNDER BOND WITHOUT PAYMENT OF IGST. Rule 2 - Manner of issuing invoice. In case of supply of goods, the invoice shall be prepared in triplicate as under: Original copy for recipient Duplicate copy for transporter Triplicate copy for supplier In case of supply of services, the invoice shall be prepared in duplicate as under: Original copy for recipient Duplicate copy for supplier Serial number of invoice issued during the tax period shall be furnished electronically in Form GSTR-1. Invoice Reference Number may be obtained by a registered taxable person when the invoice copy is uploaded on the portal. The number shall be valid for a period of thirty days from the date of uploading. Rule 3 Bill of Supply The rule provides for the details to be mentioned on the invoice called as Bill of supply, issued for supplying non-taxable goods/services as well as by the supplier opting for Composition scheme. Bill of supply may not be issued if the value of goods or services supplied is less than one hundred rupees except in case where recipient requires the bill. In such cases, a consolidated bill of supply shall be prepared by the registered taxable person at close of each day in respect of all such supplies where the same has not been issued to the recipient. Rule 4 Supplementary Tax Invoice and Credit or Debit Notes Details need to be mentioned on supplementary tax invoice and credit or debit notes.

5 Revised tax invoices may be issued in respect of taxable supplies effected during the period starting from the effective date of registration till the date of issuance of certificate of registration. Consolidated revised tax invoice can be made to a recipient in respect of all taxable supplies who is not registered under the act during such period. In case of inter-state supplies, where the value of supply does not exceed INR 2.5 lakhs, a consolidated revised invoice may be issued separately in respect of all recipients located in a state. Rule 5 Tax Invoice in special cases Tax invoice required to be issued by Input Service Distributor (ISD) shall contain the information like name, address and GSTIN of the ISD, supplier of service and recipient to whom credit is distributed, date of issue, amount of credit distributed etc. Relief has been provided to banking company or a financial institution including non-banking financial company (NBFC) in relation to contents of tax invoice. In place of regular tax invoice, a banking company or a financial institution including NBFC shall issue an invoice or any other document in lieu thereof, whether or not serially numbered or containing the address of the recipient of service as tax invoice. But it shall contain other information as required to be specified in Rule 1. Goods transport agency service provider shall issue tax invoice or any other document in lieu thereof, containing related information including GSTIN of the person liable for paying tax whether as consignor, consignee or goods transport agency. Supplier of passenger transportation service can issue ticket in any form, whether or not containing the address of the recipient of service as tax invoice. But it shall contain other information as required to be specified in Rule 1. GST Payment Rules Rule 1- Electronic Tax Liability Register All liabilities of a taxable person under GST Act shall be recorded and maintained in an Electronic Tax Liability Register (Register) in Form GST PMT-1. All amounts viz. tax, interest, penalty and late fee or any other amount payable by a taxable person as per return or determination of tax liability by a proper officer of revenue or result of mismatch or TDS/TCS or payment of tax under reverse charge or payment under composition scheme will be recorded by debiting the register. Register shall be credited on discharge of or reduction in liability due to any other reason. Rule 2 - Electronic Credit Ledger Electronic Credit Ledger (Credit Ledger) shall be maintained in Form GST PMT-2. It shall be credited on availment of input tax credit or re-credited in case of rejection of refund claim (in Form GST PMT-2A), to the extent of rejection. Credit Ledger shall be debited when the credit is utilised to discharge tax liability or the refund of unutilised credit is claimed as per section 38. Rule 3 - Electronic Cash Ledger Electronic Cash Ledger (Cash Ledger) shall be maintained in Form GST PMT-3 and will be credited once the amount is deposited in it. Amount credited shall be utilised for payment of tax, interest, penalty, fee or any other amount. Online challan will be generated in Form GST PMT-4 which remains valid for fifteen days from the date of its generation. Amount may be deposited in Cash Ledger by Internet banking through authorized banks, credit card or debit card, NeFT 2 or RTGS 3 from any bank and 2 National Electronic Fund Transfer 3 Real Time Gross Settlement

6 Over the Counter payment through authorized banks (for deposits up to INR 10,000 per challan per tax period, by cash, cheque or Demand draft). However, such restriction will not apply to deposits made by Government departments. Unregistered person can pay the amount based on a TIN generated by the proper officer. Details of such payment shall be recorded in Form GST PMT-5. Generation of Challan Identification Number (CIN) needs to be specified in the challan. If the amount is debited to bank account without generation of CIN, then it can be represented to authority in Form GST PMT-6. Cash Ledger balance shall stand reduced to the extent of refund claim and shall be re-credited to the extent of disallowance of claim. Order in this regard, shall be issued in Form GST PMT-2A (supra). TDS/TCS claimed by the taxable person shall be credited to his cash ledger. Rule 4 Identification number for each transaction UIN shall be generated for each debit or credit to the electronic cash or credit ledger, as the case may be. after the due date of filing of Form GSTR-1 4. Details of inward supplies amended by the recipient in his Form GSTR-2/4 shall be made available to the supplier in Form GSTR-1A. Form GSTR - 1 shall stand amended to the extent of modifications accepted by the supplier. Rule 2 Form and manner of furnishing details of inward supplies Inward supplies details shall be submitted in GSTR - 2 on the basis of details contained in part A of GSTR-2A. Recipient shall specify the inward supplies in respect of which he is not eligible, either fully or partially, for ITC in Form GSTR-2 where such eligibility can be determined at the invoice level. Recipient shall declare the quantum of ineligible ITC on inward supplies relatable to non-taxable supplies or for purposes other than business and cannot be determined at the invoice level in Form GSTR-2. Details of invoices furnished by an ISD in his return in Form GSTR-6 under rule 7 shall be made available to the recipient of credit in Part B of Form GSTR-2A. UIN relating to discharge of any liability shall be indicated in the corresponding entry in the electronic tax liability register. Details of TDS by the deductor furnished in Form GSTR-7 shall be made available to the deductee in Part C of Form GSTR - 2A UIN shall be generated for each credit in the electronic tax liability register for reasons other than those covered above. GST Return Rules Rule 1 Form and manner of furnishing details of outward supplies Details of outward supplies furnished by the supplier in Form GSTR-1 shall be made available electronically to each of the registered taxable persons (recipients) in Part A of Form GSTR-2A Details of TCS by an e-commerce operator under section 43C furnished in Form GSTR-8 shall be made available to the concerned taxable person in Part D of Form GSTR-2A. Rule 3 - Form and manner of submission of monthly return Part A of the monthly return (Form GSTR -3) shall be electronically generated on the basis of information furnished through returns in Form GSTR-1, 2, 4 Form GSTR-1 is to be filed by 10 th of the succeeding month

7 credit ledger, cash ledger and electronic tax liability register of the taxable person. A registered taxable person, claiming refund of any balance in the cash ledger, may claim such refund in Part B of Form GSTR-3 and it shall be deemed to be an application filed under section Rule 4 - Form and manner of submission of quarterly return by the composition supplier Every registered taxable person paying tax under section 8 6 shall, after amending the details contained in Form GSTR-4A, furnish a quarterly return in Form GSTR-4. Rule 5 - Form and manner of submission of return by non-resident taxable person Every registered non-resident taxable person shall furnish a return in Form GSTR-5, including therein the details of outward and inward supplies and shall pay the tax, interest, penalty, fees or any other amount payable under the Act or these rules within twenty days after the end of a tax period or within seven days after the last day of the validity period of registration, whichever is earlier. Rule 6 - Form and manner of submission of return by an ISD Every ISD shall, after amending the details contained in Form GSTR-6A, furnish electronically a return in GSTR- 6, containing the details of tax invoices on which credit has been received and those issued under section Rule 7 - Form and manner of submission of return by a person required to deduct tax at source 5 Section 38 of model GST law deals with refund of tax 6 Section 8 of model GST law deals with composition levy 7 Section 17 of model GST law deals with manner of distribution of credit by input service distributor Details furnished by the deductor in Form GSTR-7 shall be made available to each of the suppliers in Part C of Form GSTR-2A after the due date of filing of Form GSTR-7. TDS Certificate shall be made available to the deductee in Form GSTR-7A. Rule 8 - Form and manner of submission of statement of supplies effected through e-commerce Every e-commerce operator required to collect tax at source shall furnish a statement in Form GSTR-8, containing details of supplies effected through such operator and the amount of tax collected. Details furnished by the operator shall be made available electronically to each of the suppliers in Part D of Form GSTR-2A after the due date of filing of Form GSTR-8. Rule 9 - Notice to non-filers of returns A notice in Form GSTR-3A shall be issued, to a registered taxable person who fails to furnish monthly and final return. Rule 10 - Matching of claim of ITC Following details relating to the claim of ITC on inward supplies including imports, provisionally allowed, shall be matched after the due date for furnishing the return in Form GSTR-3 GSTIN of the supplier GSTIN of the recipient Invoice/Debit Note number and date Taxable value Tax amount Claim of ITC in respect of invoices and debit notes in Form GSTR-2 that were accepted by the recipient in Form GSTR - 2A without amendment shall be treated as matched if the corresponding supplier has furnished a valid return. Claim of ITC shall be considered as matched, Where it is accepted by the recipient in Form GSTR-2A without amendment

8 and the corresponding supplier has furnished a valid return; Where the amount of ITC claimed is equal to or less than the output tax paid on such tax invoice/debit note, by the corresponding supplier. Rule 11 - Final acceptance of ITC and communication thereof Final acceptance of ITC claim in respect of any tax period, shall be made available to the registered taxable person making such claim in Form GST ITC-1. Claim of ITC in respect of any tax period which had been communicated as mismatched but is found to be matched after rectification by the supplier and/or recipient shall be finally accepted and made available to the taxable person making such claim in Form GST ITC-1. Rule 12 - Communication and rectification of discrepancy in claim of ITC and reversal of claim of ITC Any discrepancy in the claim of ITC and the details of output tax liable to be added on account of continuation of such discrepancy shall be made available to the registered taxable person making such claim and the supplier in Form GST ITC-1 on or before the last date of the month in which the matching has been carried out. A supplier/recipient to whom any discrepancy is made available may make suitable rectifications in the statement of outward/inward supplies to be furnished for the month in which the discrepancy is made available. Where the discrepancy is not rectified, an amount to the extent of discrepancy shall be added to the output tax liability of the recipient in his return in Form GSTR-3 for the month succeeding the month in which the discrepancy is made available. Rule 13 - Claim of ITC on the same invoice more than once Duplication of claims of ITC in the details of inward supplies shall be communicated to the registered taxable person in Form GST ITC-1. Rule 14 - Matching of claim of reduction in the output tax liability Following details relating to the claim of reduction in output tax liability shall be matched after the due date for furnishing the return in Form GSTR-3 GSTIN of the supplier GSTIN of the recipient Credit Note date and number Taxable value Tax amount 15. Final acceptance of reduction of output tax liability and communication thereof Final acceptance of claim of reduction in output tax liability in respect of any tax period, shall be made available to the taxable person making such claim in Form GST ITC-1. Claim of reduction in output tax liability in respect of any tax period which had been communicated as mismatched but is found to be matched after rectification by the supplier and/or recipient shall be finally accepted and made available to the taxable person making such claim in Form GST ITC-1. Rule 16 - Communication and rectification of discrepancy in reduction in output tax liability and reversal of claim of reduction Any discrepancy in claim of reduction in output tax liability, and the details of output tax liability to be added on account of continuation of such discrepancy shall be made available to the registered taxable person making such claim and the recipient in Form GST ITC-1 on or before the last date of the month in which the matching has been carried out. A supplier/recipient to whom any discrepancy is made available may make

9 suitable rectifications in the statement of outward/inward supplies to be furnished for the month in which the discrepancy is made available. Where the discrepancy is not rectified, an amount to the extent of discrepancy shall be added to the output tax liability of the supplier in his return in Form GSTR-3 for the month succeeding the month in which the discrepancy is made available. Rule 17 - Claim of reduction in output tax liability more than once Duplication of claims for reduction in output tax liability in the details of outward supplies shall be communicated to the registered taxable person in Form GST ITC-1. Rule 18 - Refund of interest paid on reclaim of reversal The interest to be refunded shall be claimed by the taxable person in his return in Form GSTR-3 and shall be credited to his electronic cash ledger in Form GST PMT-3 and the amount credited shall be available for payment of any future liability of interest or the taxable person may claim refund of the amount under section 38. Rule 19 - Matching of details furnished by the e-commerce operator with the details furnished by the supplier Following details relating to the supplies made through an e-commerce operator, as declared in Form GSTR-8, shall be matched with the corresponding details declared by the supplier in Form GSTR 1 GSTIN of the supplier GSTIN/UIN of the recipient State of place of supply Date of invoice of the supplier Invoice Number of the supplier Tax rate Taxable value Tax amount Rule 20 - Communication and rectification of discrepancy in details furnished by the e-commerce operator and the supplier Any discrepancy in the details furnished by the operator and those declared by the supplier shall be made available to both in Form GST ITC-1 on or before the last date of the month in which the matching has been carried out. A supplier/operator to whom any discrepancy is made available may make suitable rectifications in the statement to be furnished for the month in which the discrepancy is made available. Where the discrepancy is not rectified, an amount to the extent of discrepancy shall be added to the output tax liability of the supplier in his return in Form GSTR-3 for the month succeeding the month in which the details of discrepancy are made available and such addition to the output tax liability and interest payable thereon shall be made available to the supplier in Form GST ITC-1. Rule 21 - Annual return Every registered taxable person shall furnish an annual return in Form GSTR-9, where a taxable person is opting for composition scheme; he shall furnish the annual return in Form GSTR-9A. Every registered taxable person whose aggregate turnover during a financial year exceeds INR 1 crore shall get his accounts audited and he shall furnish a copy of audited annual accounts and a reconciliation statement, duly certified, in Form GSTR- 9B. Rule 22 - Final return Every registered taxable person required to furnish a final return shall furnish such return in Form GSTR-10. Rule 23 - Details of inward supplies of persons having UIN Every person, who has been issued UIN shall furnish the details of inward supplies of taxable goods and/or services in Form GSTR-11.

10 24. Provisions relating to a Tax Return Preparer (TRP) An application in Form GST TRP-1 may be made for enrolment as TRP by any person who satisfies conditions specified in this regard. On enrolment of TRP, proper officer shall issue a certificate in Form GST TRP-2 or reject the application where it is found that the applicant is not qualified to be enrolled as a TRP. The enrolment made shall be valid until it is cancelled. If any TRP is found guilty of misconduct in connection with any proceeding under the Act, the authorised officer in Form GST TRP-4 may direct that he shall henceforth be disqualified under section 34, after giving him a notice to show cause in Form GST TRP-3 and after giving him a reasonable opportunity of being heard. An appeal before the Commissioner can be filed against such an order within thirty days from the date of the order. A list of enrolled TRPs shall be maintained on the common portal in Form GST TRP-5 and the authorised officer may make such amendments to the list as may be necessary. Any taxable person may, at his option, authorise a TRP in Form GST TRP-6 to undertake the following activities: furnish details of outward and inward supplies; furnish monthly, quarterly, annual or final return; make payments for credit into the electronic cash ledger; file a refund claim; and file an application for amendment or cancellation of registration. Any taxable person can withdraw such authorisation in Form GST TRP-7. Where a statement has been furnished by TRP, a confirmation shall be sought from the taxable person over or SMS. In case the taxable person fails to respond to the request for confirmation till the last date of furnishing of such statement, it shall be deemed that he has confirmed the statements furnished by the TRP. Before making any submissions by TRP, taxable person shall ensure that the facts mentioned in the return are true and correct. TRP shall prepare the statements with due diligence and affix his digital signature on the statements prepared by him or electronically verify using his credentials. 25. Conditions for purposes of appearance No person shall be eligible to attend before any authority, as a TRP unless his name has been entered in the list of TRPs. Such TRP shall, if required, produce a copy of the authorization given by the taxable person or person in Form GST TRP - 6. GST Refund Rules Rule 1 - Refund of tax, interest, penalty, fees and any other amount Any registered taxable person, except those under section 38(6)(d), may file an application for refund of any tax, interest, penalty, fees or any other amount paid by him in Form GST RFD-1. Refund claim of balance in the cash ledger as per section 35(6) read with section 38 may be made through the return for the relevant tax period in Form GSTR-3, 4 or 7. In case of exports of goods, application for refund shall be filed after the export manifest or export report is delivered under section 41 of the Customs Act, The application of refund in case of supplies made to SEZ unit or developer or supplies regarded as deemed exports shall be made by such unit or developer

11 or the recipient of deemed export supplies. Application of refund shall be accompanied by any of the following documentary evidences, as applicable: and interest is not passed on to any other person. Where the application of refund relates to ITC, the credit ledger shall be debited with the amount of refund so claimed. Reference number of the order and a copy of the order passed by the proper officer/appellate authority/any competent court. In case of export of goods or services without payment of tax, under bond or letter of undertaking, refund of ITC shall be granted as per the following formula: Export of goods statement containing number and date of shipping bills or bills of export and relevant export invoices. Supply of goods to SEZ unit or developer - statement containing number and date of invoices as prescribed in GST invoice rules. Deemed exports statement containing the number and date of invoices. Export of services - statement containing number and date of invoices and BRCs 8 or FIRCs 9. Supply of services to SEZ unit or developer - statement containing number and date of invoices and the details of payments. Inverted duty structure statement in Annex 1 of Form GST RFD-1 containing the number and date of invoices received and issued during a tax period. Finalisation of provisional assessment reference number and a copy of the final assessment order. Refund amount less than INR 5 lakhs declaration mentioning that the incidence of tax and interest has not been passed on to any other person. Refund amount INR 5 lakhs or more a certificate issued by Chartered Accountant or a Cost Accountant in Annex 2 of Form GST RFD-1 certifying that the incidence of tax 8 Bank Realization Certificates 9 Foreign inward Remittance Certificates Refund = (Export turnover of goods + export turnover of services) * Net ITC / Adjusted Total turnover Refund of ITC shall not be allowed if the supplier of goods and/or services avails the drawback allowed under Drawback Rules or claims rebate of tax paid under the Act or the IGST Act. Casual taxable person or non-resident taxable person shall claim refund either in the last return required to be filed by him or only after filing of the said last return. In case of refund from cash ledger, acknowledgement in Form GST RFD-2 shall be provided to the applicant, specifying the date of filing the refund claim. For refund application other than refund from cash ledger shall be forwarded to the proper officer. Post scrutiny of application, he shall issue an acknowledgement in Form GST RFD-2 to the applicant, specifying the date of filing the refund claim. Proper officer shall communicate the deficiencies noticed in Form GST RFD 3. Applicant shall file a refund application after rectification of such deficiencies. Rule 2 - Grant of provisional refund Provisional refund shall be granted subject to the following conditions: The applicant has not been prosecuted during the preceding 5 years for any offence under the Act or earlier law where the amount of tax evaded exceeds INR 2.5 crores.

12 GST compliance rating of the applicant is not less than 5 on a scale of 10. No proceedings of any appeal, review or revision are pending on the issues which form the basis of refund. Once the proper officer is satisfied with the evidences submitted he shall make an order in Form GST RFD 4 sanctioning the refund on provisional basis within a period not exceeding seven days from the date of acknowledgement. The proper officer shall issue a payment advice in Form GST RFD-8 for the amount sanctioned. Rule 3 - Order sanctioning refund After examination of the application, once the proper officer is satisfied that refund is due and payable to applicant, he shall make an order in Form GST RFD-5, sanctioning the refund amount after adjusting the amount refunded on a provisional basis and any outstanding demand under the Act or earlier law. Where the refund amount is completely adjusted against any outstanding demand, an order giving details of adjustment may be issued in Form GST RFD-6. If whole or any part of the refund amount claimed is not admissible or payable to the applicant, proper officer shall issue a notice in Form GST RFD-7. Claimant is required to reply within fifteen days from the date of receipt of such notice. Rule 4 Credit of the amount of rejected refund claim When the refund amount is rejected under Rule 3, the same shall be recredited to the credit ledger by an order in Form GST PMT-2A. Rule 5 Order sanctioning interest on delayed refunds The proper officer shall make an order and a payment advice in Form GST RFD-9, where any interest is due and payable to the applicant. Rule 6 Refund of tax to certain persons Any person eligible to claim refund of tax paid on his inward supplies as per section 38(6)(d) shall apply for refund in Form GST RFD-10 once in every quarter along with a statement of inward supplies of goods and/or services in Form GSTR-11, prepared on the basis of statement of outward supplies furnished by the corresponding suppliers in Form GSTR-1. If an express provision in a treaty or other international agreement, to which the President or the Government of India is a party, is inconsistent with the provisions of these rules, then such treaty or international agreement shall prevail. Comments The rush to meet the target date set by the Government for implementing GST in the country is evident from the short time given to the stakeholders to revert with comments and representation on draft rules on business process for GST. Early finalisation of rules could facilitate industry inc to commence undertaking necessary business systems modification for transitioning to a new tax regime by April Provisions of the Rules such as electronic authentication for registration, specific application for non-resident taxable person and self updation of non-core details without needing an approval are positive steps.

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