CBIC Clarified on GST Refund for Unregistered Persons

Central Board for Indirect Taxes and Customs (CBIC) received many representations requesting a facility to claim Goods and Services Tax (GST) paid by unregistered buyers/ recipients. This request is made for the cases such as:

  • Cancellation of the contract, 
  • cancellation of an agreement for the supply of services for the construction of a building/ flat, or 
  • termination of the long-term insurance policy.

Accordingly, the department introduced a new functionality on the GST portal to allow unregistered persons (in specific cases mentioned above) to obtain a temporary GST registration and apply for a refund under the category ‘Refund for unregistered person’.

Also, the department notification no. 26/2022-Central tax on 26th December 2022 to amend GST RFD-01 and insert statement 8 to provide for the documents to be furnished.

Amid these, CBIC clarified as follows:

  • The unregistered person shall obtain a temporary GST registration on the common portal using the Permanent Account Number (PAN).
  • The unregistered person shall select the same state/UT where the supplier (in respect of whose invoice the refund is to be claimed) is registered.
  • After that, the unregistered person should complete the Aadhaar authentication. 
  • Further, the unregistered person shall provide the bank account details in their name obtained using their PAN.
  • The refund application shall be filed in GST RFD-01 on the GST portal under the category ‘Refund for unregistered person’.
  • Also, the applicant shall upload statement 8 in pdf format and other requisite documents.
  • It is to be noted that separate applications for the refund to claim a refund from different suppliers.
  • Further, if the suppliers are registered in different states/UTs, the applicant shall obtain temporary registration in each of the concerned states/UT.
  • The date of issuance of the contract’s cancellation letter shall be considered the date of receipt of the services by the applicant. The applicant shall calculate the two years due date to file a refund application from this date.
  • Also, an unregistered person can not file a refund application if the amount is less than one thousand rupees.
  • If the supplier already paid back some amount to the unregistered person, only the proportionate amount of tax involved shall be refunded.

The proper officer shall process the refund application filed by the unregistered person like other RFD-01 claims.

For any clarifications/feedback on the topic, please contact the writer at dvsr.anjaneyulu@cleartax.in

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