Disbursement of refund by single authority in GST Regime

Disbursement of refund by single authority in GST Regime

1. Referred to Notification No. 39/2019 ? Central Tax dated 31st August, 2019

2. Following sub-section 8A inserted in section 54 of the CGST Act,
 3. ?(8A) The Government may disburse the refund of the State tax in
such manner as may be prescribed?.

4. Above shall come into force w.e.f 1st September, 2019.

5. A single authority for sanctioning and processing GST refunds is in the offing as the Finance Ministry looks to speed up and simplify the process for exporters.

6. As per the system being worked out by the Revenue Department, the taxpayer will get full refund from his jurisdictional officer once the claim is sanctioned, while at the back-end the Centre and states will apportion the amount to be paid to each other.

7. According to changes made, once a taxpayer files refund claim with the jurisdictional tax authority, say the central tax officer, then he would clear 50 per cent of the claims, and the remaining is cleared by the state tax officers after further scrutiny.

8. A similar system was followed (where two authorities settling the same refund claims adds to unnecessary complexities and inconvenience for the taxpayers) when a taxpayer approaches the state tax officers for Goods and Services Tax (GST) refunds. Thus, the time taken to clear the entire refund amount gets longer, leading to liquidity crunch for exporters. This issue brings the Disbursement of refund by single authority- (A New System) into existence.

9. Under the proposed ‘single authority mechanism’, once a refund claim is filed with a tax officer, whether Centre or state, the officer will check, assess and sanction full tax refund (both Central GST and State GST portion), thereby removing difficulties faced by the taxpayers. This will later get adjusted / settled amongst the two tax authorities through internal account adjustments.

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