This circular provides clarifications on various refund-related issues under GST with the objective of ensuring uniform implementation and reducing procedural difficulties faced by taxpayers.

The circular simplifies the refund filing process by allowing electronic upload of all refund applications in Form GST RFD-01A along with supporting documents on the common portal, instead of mandatory physical submission. Physical submission is made optional, except in limited cases such as unallocated taxpayers. The refund application is deemed to be filed on the date of generation of ARN, and timelines for acknowledgement and processing are linked to this date.

It clarifies the method of calculation of refund of accumulated input tax credit in cases of inverted duty structure. The term “Net ITC” includes ITC availed on all inputs during the relevant period, irrespective of the rate of tax on such inputs. Refund is to be computed strictly in accordance with the formula prescribed under rule 89(5).

The circular reiterates that refund amounts must be credited to the taxpayer’s bank account within 60 days from the date of ARN generation, failing which interest at the prescribed rate becomes payable. Guidance is also provided for refund applications generated on the portal but not physically received earlier, including re-credit of amounts in eligible cases.

Further clarifications are issued on refund of accumulated compensation cess in cases of zero-rated supplies, treatment of ITC availed in a subsequent tax period for earlier invoices, and the scope of the term “inputs”. It is clarified that stores, spares, packing materials and similar items used in business qualify as inputs, while refund of ITC on input services and capital goods is not permissible in cases of inverted duty structure.

(Please note: This circular was subsequently rescinded vide Circular No. 125/44/2019-GST dated 18.11.2019.)