Para 14.2.13 — GST refunds occur for various reasons — exports, z
Original Rule Text
14.2.13 REFUNDS UNDER GST 14.2.13.1 Refund of GST may occur due to various reasons viz.
Refund of IGST paid on Goods exported out of India Refund arising due to supply of zero rated Goods and Services Refunds due to inverted duty structure Refund due to deemed exports Refund of GST paid by Unique Identification Number (UIN) entities like Embassies, UN agencies etc.
14.2.13.2 PROCESS OF REFUND OF IGST PAID BY EXPORTERS ON GOODS EXPORTED OUT OF INDIA
a) In accordance with Rule 96 of CGST Rules, the shipping bill filed by an exporter of goods shall be deemed to be an application for refund of integrated tax (IGST) paid on the goods exported out of India. The application is deemed to have been filed only when the Export General Manifest (EGM) has been generated and the GSTR3B has been filed by the tax payer.
b) On receipt of the information of valid return filing of GSTR 3B and GSTR1 from the common portal (GSTN), the designated officer of Customs processes the claim and sanction the refund in the ICES/ICEGATE System. He also generates a sanction file for IGST Refunds.
c) The IGST sanction file contains a list of beneficiaries for whom the IGST Refunds has been sanctioned by the officer. This data is sent by the ICEGATE system to the PFMS system in specified file format.
d) The PFMS system validates the file and places it at the DDO level. An officer of Customs department designated as the DDO generates the bill in PFMS for these sanctions received at his level, digitally signs and sends it to the PAO [ e-PAO GST Refunds Mumbai].
e) The e-Pay and Accounts Officer receives the e-refund bills, and the same are cleared in PFMS at three levels viz. Dealing Hand, AAO and Pay and Accounts Officer. The Pay and Accounts Officer digitally signs the payment file for disbursement to the beneficiaries through the authorized bank of CBIC.
14.2.13.3 GST REFUND DISBURSEMENT THROUGH SINGLE AUTHORITY (A)
(i) Under GST the tax payers are either under the Jurisdiction of the Centre Tax authority (CBIC) or the State Tax authority. The refund shall be sanctioned by the Tax authorities either under CGST/IGST/CESS/SGST(UTGST) or under all or combination of the tax heads irrespective of whether the tax payer is under Centre or State’s jurisdiction. During manual process of these sanctions the refund sanctions were passed to the respective pay and accounting authorities through the nodal officers for disbursement.
(ii) To ease the process of refunds to tax payers, the GST Council decided that the disbursement of GST refunds will be by a single authority, i.e. the Centre.
(iii) Refund by Single Authority means that the Refund sanction would be made either by the Central Tax Authority or the State/UT Tax authority but the payment will be made by a single PAO of the Centre irrespective of the sanctioning authority and the type of Tax.
(iv) The refund of SGST/UTGST will also be disbursed by the Centre on behalf of the States/UTs. The amount so disbursed will be recovered from the States/UTs concerned at the time of settlement of IGST to the States/UTs.
(v) The automation of GSTN to handle the GST Refunds and its successful integration with PFMS ensured that the Disbursement of GST Refunds will be through fully automated, secured, transparent and digitized payments through a single authority as decided by the GST council.
(vi)In the automated process, the Tax Payer applies for Refund on the GSTN portal and an ARN number is generated by the portal. The Application is then available to the jurisdictional tax authority (Centre or State as the case may be) for further scrutiny and sanction.
Note: To ensure the correctness of the bank details provided by the tax payer, GSTN sends the ASSESSEE REGISTRATION file to PFMS containing the bank details of the tax payers who have filed the Refund applications. PFMS gets the Bank details validated from the respective banks and reports back the same to GSTN. The tax authorities will be able to sanction the refund to the tax payer but will be able to issue payment advice (RFD 05) only if the bank details are successfully validated by PFMS. This ensures that most of disbursements to be made are successful. In case of failed bank validation, the tax payers are required to provide the correct bank details which are once again verified before issue of payment advice.
[B] BRIEF PROCESS FLOW OF REFUND OF GST 1. Refund Applications (in the form RFD01) are processed by the respective jurisdictional Tax Officers (Centre and States) on GSTN.
2. The GSTN pushes the R-1 file/Bill containing the State-wise RFD-05 (Payment Advices) of various taxpayers received from States and Centre authorities to the PFMS. The R-1 file is processed by PFMS for validations. After file validation, the file/bills are available at the login access of the DDO. The DDO signs digitally and forwards it to the e-PAO (GST Refunds through Single Authority) for direct digital payment to the taxpayer’s account. The payment confirmation with regard to the RFD-05 is shared by PFMS with GSTN in R-2 File.
3. Initial Disbursement of Refund takes place from the Central Government Cash Account and the settlement of Funds between Centre and States is done on monthly basis.
[C] ACCOUNTING OF GST REFUNDS 1. Following accounting entries are posted at the time of making refund payments:
Concerned Revenue Head
(s) of Central GST (-) Credit AND/OR Corresponding Detailed Head under dedicated Minor Head below 8658.00.140 (in case of refunds on behalf of State/UTs) Debit
8670.00.111– Electronic Advice Credit 2. Following accounting entries are made at the time of receipt of Scroll from the accredited Bank:
8670.00.111.00 – Electronic Advices (-) Credit 8658.00.108.00 Public Sector Bank Suspense Credit
3. On receipt of put through statement from RBI about the refunds made from CFI, 8658.00.108- PSB (-) Credit 8675-Reserve Bank Deposits Credit
4. Following Accounting Entry are made at the time of receipt of Clearance Memo from RBI for settlement of SGST/UTGST refund payments made on behalf of the State/UTs
8675.00.101 Deposits with Reserve Bank – Central (Civil) Debit 8658-00-140 Dedicated Head of the State/UT (-) Debit
14.3 CENTRAL EXCISE AND SERVICE TAX COLLECTIONS 14.3.1 The Central Excise and Service Tax collections are made through the EASIEST and ePAYMENT system. In this process the tax payers make electronic payments of Excise and Service Tax by logging to the NSDL-EASIEST website.
14.3.2 With the roll out of GST from 01.07.2017, the tax payers who had migrated to GST access the portal www.gst.gov.in for making GST payments and filing returns. The tax payers who deal with goods attracting Central Excise levy still make payments through NSDL-EASIEST website and file returns on www.aces.gov.in . However, CBIC, in order to have an integrated data, has integrated the ACES and GST data, and a new portal www.cbic-gst.gov.in has been made operational w.e.f. 01.07.2019. The tax payers for Central Excise and Service Tax (legacy payments) now login to this site for making payments and filing returns.
14.3.3 In the earlier system, e-payments of Central Excise and Service Tax were made through NSDL-EASIEST portal. This portal provided the platform for generating challan and directed the taxpayer to the internet banking site of the selected authorised banks. The DG Systems of CBIC has now integrated the payments of Central Excise and Service Tax with the ICEGATE portal and the new payment gateway portal viz. CBIC (ICEGATE-CEP) e-payment. [https://cbicpay.icegate.gov.in/iceepay/ ]
What This Means
GST refunds occur for various reasons — exports, zero-rated supplies, inverted duty structure, deemed exports, and purchases by diplomatic entities. For exporters, the shipping bill serves as the refund application. The refund process flows from GSTN (application) to Customs/Tax Officer (sanction) to PFMS (bill processing) to e-PAO (payment). Under the Single Authority system, all GST refunds (including SGST) are disbursed by the Centre, with SGST refund amounts recovered from States during IGST settlement. The entire process is automated through GSTN-PFMS integration.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1GST refunds arise from exports, zero-rated supplies, inverted duty structure, deemed exports, and UIN entity purchases
- 2For exports, shipping bill is deemed refund application — processed after EGM and GSTR3B are filed
- 3Single Authority: All GST refunds (including SGST/UTGST) disbursed by Centre; SGST recovered during IGST settlement
- 4Fully automated: GSTN validates bank details through PFMS, then pushes payment files to DDO and e-PAO
- 5Accounting: Revenue heads debited (or 8658.00.140 for State refunds), with bank scroll reconciliation
Practical Example
An exporter in Chennai ships goods worth Rs 1 crore to the US after paying IGST of Rs 18 lakh. The shipping bill filed at Customs is treated as the refund application. After the Export General Manifest is generated and GSTR-3B is filed, GSTN validates the exporter's bank details through PFMS. The Customs officer sanctions the refund, which flows electronically to the DDO at ICEGATE, then to the e-PAO (GST Refunds Mumbai), who digitally signs the payment for direct credit to the exporter's bank account.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Cross References
Frequently Asked Questions
What is the Single Authority system for GST refunds?▼
How are exporter bank details validated?▼
What types of GST refunds exist?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.