GST Section 55 Refunds: A Guide for UN Agencies, Embassies and International Organizations

Section 55 of the CGST Act, 2017, enables specified international entities—such as UN agencies, multilateral organizations, foreign embassies, and other notified bodies—to claim refunds on GST paid for official inward supplies of goods or services in India. These entities must hold a Unique Identification Number (UIN), file quarterly Form GSTR-11 detailing their purchases, and submit refund applications using Form GST RFD-10 within six months of the relevant quarter.

The refund process involves several procedural steps governed by Rules 82 and 95, including possible scrutiny and communication through forms like RFD-02, RFD-06, RFD-07, RFD-08, and RFD-09. This framework ensures tax neutrality for diplomatic and international entities, fostering global cooperation while maintaining procedural rigor.

Understanding GST Section 55: Refunds for Special Entities

Section 55 of the Central Goods and Services Tax (CGST) Act, 2017, effective from July 1, 2017, provides a crucial mechanism for specific international organizations and diplomatic entities to claim a refund of taxes paid on their inward supplies of goods or services or both. This provision acknowledges their unique status and aims to prevent GST from becoming a cost burden for them, fostering amicable relations with foreign countries and international bodies.

Who is Eligible for Refund under Section 55?

The Government, based on the recommendations of the GST Council, may notify the following entities as eligible for a refund under Section 55:

• Specialized agencies of the United Nations Organisation (UNO): This includes various UN bodies operating within India.
• Multilateral Financial Institutions and Organisations: Specifically, those notified under the United Nations (Privileges and Immunities) Act, 1947.
• Consulates or Embassies of foreign countries: Diplomatic missions of other nations in India.
• Any other person or class of persons: As may be specifically notified by the Government in this regard.

Key Conditions and Restrictions for Claiming Refund:

To be eligible for a refund under Section 55, these entities must adhere to certain conditions and restrictions:

• Unique Identification Number (UIN): The eligible entity must possess a Unique Identification Number (UIN) issued by the GST authorities. Without a UIN, claiming refunds on GST paid is not possible.
• Notified Supplies Only: Refunds are applicable only for taxes paid on “notified supplies” of goods or services or both received by these agencies. These supplies must be for official purposes and not for the personal use of diplomats or others.
• Regular Filing of GSTR-11: UIN holders are required to file Form GSTR-11, a statement of inward supplies, regularly. This form is crucial for auto-populating details into the refund application.
• Supplier’s Responsibility: The supplier providing goods or services to UIN holders must mention the UIN on all invoices, credit notes, and debit notes issued. Supplies to UIN holders are considered B2B (Business to Business) transactions, even though UIN holders typically do not have a GSTIN.
• No Input Tax Credit (ITC): Unlike other taxpayers, these entities are not eligible to claim Input Tax Credit on the GST paid on such notified supplies. Instead, a direct refund mechanism is provided.
• Time Limit for Filing Refund: The refund application must be filed within six months from the last day of the quarter in which the supply was received. For example, if a supply is received in January, the refund can be claimed within six months from the last day of the quarter ending March 31.
• Supporting Documentation: While Form GSTR-11 is the primary document, applicants may need to attach invoices, credit notes, and debit notes to Form GST RFD-10 if required. If the UIN of the applicant is not mentioned on a tax invoice, a copy of the invoice, duly attested by the applicant’s authorized representative, must be submitted with the refund application.

Relevant Rules and Forms for Section 55 Refunds:

The refund process under Section 55 is governed by specific rules and forms:

• Rule 82: Details of inward supplies of persons having Unique Identity Number
  • This rule mandates every UIN holder claiming a refund to furnish details of their inward supplies of taxable goods or services or both electronically in FORM GSTR-11. This form is filed through the common portal, either directly or via a Facilitation Centre.
  • FORM GSTR-11 is a quarterly statement of inward supplies received by UIN holders. It is not mandatory to file a nil GSTR-11 if there are no inward supplies in a quarter, but filing it is necessary before claiming a refund in FORM GST RFD-10 for the relevant quarter.
  • The details in GSTR-11, particularly in Table 3A (Details of Invoices received) and 3B (Details of Credit/Debit Notes received), are auto-populated from the GSTR-1/5/1A filed by their suppliers. UIN holders can also manually enter details.
• Rule 95: Refund of tax to certain persons
  • This rule outlines the procedure for applying for refunds under Section 55.
  • Eligible persons are required to apply for a refund in FORM GST RFD-10 once in every quarter, electronically on the common portal, along with a statement of inward supplies from FORM GSTR-11.
  • Upon receipt of the refund application, an acknowledgment in FORM-GST-RFD-02 is issued. This acknowledgment confirms receipt of the application and contains details like the acknowledgment reference number, date of submission, and any deficiencies.

Refund Application and Processing Flow (Forms):

Preparation (FORM GSTR-11): The UIN holder compiles details of inward supplies in FORM GSTR-11 on a quarterly basis. This form is crucial for auto-populating the refund application.

Application for Refund (FORM-GST-RFD-10): The UIN holder then files FORM-GST-RFD-10 (Application for Refund by any specialized agency of UN or any Multilateral Financial Institution and Organization, Consulate or Embassy of foreign countries, etc.) on the GST Portal. This form requires details such as the UIN, name, address, tax period, amount of refund claimed (segregated by tax head), and bank account details. The “Details of the tax paid on purchases as reported under GSTR-11” table in RFD-10 is auto-populated from GSTR-11.

Acknowledgement of Receipt (FORM-GST-RFD-02): Upon successful submission of FORM GST RFD-10, an acknowledgment is issued in FORM-GST-RFD-02.

Notice for Rejection (FORM-GST-RFD-08): If the proper officer finds any discrepancies or reasons for inadmissibility during the examination of the application, a show cause notice in FORM-GST-RFD-08 is issued to the applicant, requiring them to furnish a reply.

Reply to Show Cause Notice (FORM-GST-RFD-09): The applicant must respond to the show cause notice within 15 days (or as specified) by filing a reply in FORM-GST-RFD-09, providing explanations and supporting documents.

Withholding Order (FORM-GST-RFD-07): If the proper officer is of the opinion that the refund amount is liable to be withheld (e.g., due to outstanding tax, interest, or penalty), an order in FORM-GST-RFD-07 (Order for withholding the refund) is passed, informing the applicant of the reasons. This form can also be used for complete adjustment of sanctioned refund against outstanding demands (Part A).

Refund Sanction/Rejection Order (FORM-GST-RFD-06): After examination of the application, including any replies to notices, the proper officer issues an order in FORM-GST-RFD-06 (Refund Sanction/Rejection Order). This order sanctions the amount of refund the applicant is entitled to or rejects the claim in whole or in part, providing reasons for rejection.

FAQs on Section 55 of CGST Act

Who is eligible to claim a GST refund under Section 55?
Specialized agencies of the United Nations, multilateral financial institutions notified under the UN (Privileges and Immunities) Act, 1947, foreign embassies, consulates, and any other entities specifically notified by the government are eligible.

What is the purpose of Section 55 of the CGST Act?
It allows certain international and diplomatic entities to claim a refund on GST paid for inward supplies used for official purposes, preventing tax from being a financial burden.

What is a Unique Identification Number (UIN)?
A UIN is a special number issued by the GST authorities to eligible entities under Section 55 for the purpose of tracking and processing GST refunds.

Is a UIN mandatory for claiming refunds?
Yes, without a UIN, the entity cannot file GSTR-11 or claim refunds on GST paid.

What is Form GSTR-11?
GSTR-11 is a quarterly return filed by UIN holders that lists inward supplies received during the quarter. It is required for refund processing.

Is it necessary to file GSTR-11 every quarter even if there are no supplies?
Filing is not mandatory if there are no supplies, but it must be submitted before claiming a refund for that quarter.

What is Form GST RFD-10?
It is the official form used by eligible entities to apply for a refund of GST paid on inward supplies for official use.

What is the time limit for filing GST refund applications under Section 55?
The application must be filed within six months from the last day of the quarter in which the relevant supply was received.

Are personal purchases by diplomats eligible for refund?
No, only supplies for official use by the notified entity are eligible for GST refunds.

What details are required in Form GST RFD-10?
The form requires the UIN, entity name, address, tax period, bank details, and auto-populated supply data from GSTR-11.

Can UIN holders claim Input Tax Credit (ITC)?
No, they are not eligible to claim ITC; they must use the refund process instead.

What if the supplier forgets to mention the UIN on the invoice?
A copy of the invoice attested by the entity’s authorized representative must be submitted with the refund application.

Who must mention the UIN on the invoice?
The supplier providing goods or services to UIN holders must mention the UIN on all tax documents issued.

How are supplies to UIN holders treated in GST returns?
They are treated as B2B transactions even though the UIN holder does not have a GSTIN.

What happens after submitting Form GST RFD-10?
An acknowledgment (RFD-02) is issued. The refund application is then examined by the proper officer.

What if the refund application is found deficient?
The applicant receives a show cause notice in Form RFD-08 and must respond with Form RFD-09 within 15 days.

Can a refund be withheld?
Yes, through Form RFD-07, if there are pending dues like tax, interest, or penalties.

How is the final refund decision communicated?
Through Form RFD-06, which sanctions or rejects the refund application with reasons.

Which rules govern the Section 55 refund process?
Rule 82 (inward supplies reporting by UIN holders) and Rule 95 (refund procedure) under the CGST Rules.

Where can UIN holders file these forms?
All forms—GSTR-11, RFD-10, and related documents—must be filed electronically on the GST common portal.

Can the refund be adjusted against outstanding dues?
Yes, the sanctioned refund may be fully or partially adjusted against any existing tax liability via Form RFD-07.

What supplies qualify as ‘notified supplies’?
Only supplies specified and notified by the government for official use by the eligible entities qualify.

Are foreign missions required to register under GST?
No, they are not required to register but must obtain a UIN to claim refunds.

Can a refund be claimed for supplies made before obtaining a UIN?
No, only supplies received after issuance of the UIN are eligible for refund under Section 55.

Section 55 of the CGST Act plays a vital role in simplifying tax compliance for international organizations and foreign diplomatic missions in India. By providing a clear refund mechanism for taxes paid on their official inward supplies, the Indian government demonstrates its commitment to international cooperation and diplomatic courtesies. Adherence to the prescribed rules, particularly the timely filing of GSTR-11 and RFD-10, is essential for these entities to avail of these refunds seamlessly.