• Notification Date: 21-12-2022
  • Notification No: N/A

Home-Buyers and Long-term Insurers Eligible to get GST Refunds for Cancellations without Credit Note

In the 48th GST Council meeting, the members have unanimously taken a critical decision that offered significant relief to all the home buyers and individuals who bought long-term insurance contracts. The GST Council has decided to allow a refund of the GST paid to developers by such home buyers in case of cancellation of their house or flat construction without receiving any credit notes within the time limit under the law. People who bought long-term insurance policies but had to cancel them in between may claim proportionate GST paid for the remaining policy period left after cancellation. 

At present, the GST law does not have any provision or procedure for allowing GST refunds to unregistered persons. In cases where the service agreement or service contract is cancelled, there are no procedures for getting a refund. Also, this applies in cases where the time limit to issue the credit note is over. 

The Union Finance Minister Nirmala Sitharaman, on Saturday, stated that it is essential that the Central Board of Indirect Tax and Customs (CBIC) issues a Circular to clarify the scope, applicability and process along with an amendment to the provisions and insertion of a new CGST Rule. 

There is a lack of rules on refund of taxes to people unregistered under the GST law especially for a commoner. Many tax experts have expressed concerns about this matter. With the Council’s decision expected to be implemented after the Union Budget 2022, home buyers who had paid GST on cancelled contracts may claim a refund. The process is expected to be hassle-free and quick. It shall offer the common person with a smooth experience while claiming the refund. 

Apart from this, unregistered dealers, suppliers, and composition taxpayers can also begin selling on e-commerce platforms from 1st October 2022.