Interest on Delayed Payments of Refund under GST

If there is any Tax that is to be refunded to the applicant is not refunded within the period of 60 days from the date of receipt of the application under subsection (1) of section 54, Interest at a rate which doesn’t exceed 60%.

Interest in delayed refunds falls under section 56 of GST. Under This section, the payment of interest on delayed refunds is provided after the period of 60 days from the date of receipt of the application to prevent delays or grant of refund.

What could be considered a refund?

The Following would be considered as a Refund under GST:

• Tax refund on the goods or services or both under zero-rated supplies
• Inputs or input Services utilized in making such zero-rated supplies, so the refund on Tax on them
• The supply of goods is regarded as deemed exports, so the refund of tax on them
• Refund of ITC (Input Tax Credit)

What would be the Interest rates on a refund?

After the application for refund is filed, the GST officer is to issue an order within 60 days from the date of filing of the application, only if the officer is satisfied with the claimed amount of refund whether full or partial. However, if the refund is not made within 60 days of the application by the authoritative officer, then interest @ 6% p.a. would be calculated on the amount of refund for the delayed period.

If a refund order is granted by an Appellate Authority/Tribunal/court, then the interest would be calculated at a 9% rate for the delayed period.

The delayed period would be counted from the date of receipt of the Application for Refund to the date of payment of the refund on which the interest rate of either 6% or 9% p.a. would be calculated.