GST refund to unregistered person on cancellation of Construction Contract or Long term insurance policy

Have you got your construction contract cancelled and builder has refunded you money excluding GST? Or have you terminated long term insurance policy and insurance company has refund premium amount excluding GST? This may happen because time limit of issuing credit note has got expired under GST.

Still, you don’t need to bear this GST costing as government has given a remedy to claim refund of such GST amount from GST department itself vide Circular No. 188/20/2022-GST dated 27th December, 2022.

Following is a brief about procedure to claim refund from GST department:

1. First, Unregistered person is required to obtain temporary GST registration using his PAN;

2. Registration shall be obtain in the state where supplier (i.e., Builder or Insurance company) is registered.

3. Refund application shall be filed under category ‘Refund for unregistered person’ alongwith requisite documents.

4. The refund claim shall not exceed the tax amount declared on the invoices in respect of which refund is being claimed.

5. As per Rule 89(2)(kb) of CGST Rules, a certificate shall be obtained from the supplier that:

a. He has paid tax in respect of the invoices on which refund is being claimed by the applicant;

b. he has not issued any credit note for such tax amount;

c. he has not claimed and will not claim refund of the amount of tax involved in respect of these invoices.

d. Such certificate shall be filed alongwith refund application.

6. Separate refund applications shall be filed for invoices issued by different suppliers.

7. Further, where the suppliers, in respect of whose invoices refund is to be claimed, are registered in different States/UTs, unregistered person shall obtain the temporary registration in each of the concerned States/UTs.

8. No refund application shall be filed if time limit of issuing credit note has not been expired as per GST law.

9. Refund application can be filed within 2 years from date of issuance of cancellation letter.

10. No refund amount shall be granted where refund amount is less than INR 1000.

11. The proper officer shall scrutinize the application with respect to completeness and eligibility of the refund claim to his satisfaction and issue the refund sanction order in FORM GST RFD-06 accordingly.

Click here to access copy of circular

About the Author

You may also like these