To get your GST refund, you will need to issue GST credit notes before six months from the end of the financial year i.e. September or the date of filing the annual return, whichever is earlier. Post this, the Central Board of Indirect Tax and Custom (CBIC) will not entertain your refund request.
Credit notes help distributors claim their GST refund in case of reversal or clawback. Simply put, distributors can claim GST refund if they have paid GST and there is a reversal or clawback of their commission income by issuing credit notes with the help of AMC/registrar and transfer agents.
A senior R&T official said, “It is almost a year since the government has implemented GST. Many distributors had completed the first financial year 2017-18, successfully. Now, they have to meet the requirement on credit note issuance within six month of the completion of financial or filing the annual return, whichever is earlier.”
Section 34(2) of the CGST act says that any registered dealer can issue a credit note in relation to supply of goods or services up to a period of six months from the end of the financial year or the date of filing the annual return, whichever is earlier.
However, the key challenge is to factor in the claw-back clause before issuing such credit notes. Claw-back is recovering upfront commission in case of early exit of investors.
Currently, in some schemes, IFAs get upfront commission if their client remains invested for at least three years. However, if the client redeems his/her investment, AMCs claw back the upfront commission. By the time of claw-back, many distributors end up paying GST on commission. However, distributors cannot claim such a recovery beyond six months from the end of the financial year or the date of filing annual return, whichever is earlier as they cannot issue credit note beyond this timeline.
On its website, AMFI says that distributors having GST registration will have to issue credit note within 30 days of claw back. However, the six months limitation is applicable for such a credit note issuance.
