According to the finance ministry, unregistered individuals can apply for Goods and Services Tax refunds for cancelled contracts or early cancellation of insurance policies by temporarily registering on the GST site. The GST site now offers the "Refund for Unregistered Person" option, and anyone who is not registered but wishes to apply for a refund must first create a temporary account using his Permanent Account Number (PAN) on the common portal.
The Central Board of Indirect Taxes and Customs (CBIC) stated in a circular that it had received requests for providing unregistered buyers and recipients with a facility for claiming a refund of the amount of tax they paid in the incident that a contract or agreement for the supply of goods and services for the construction of a flat or building was cancelled or upon the termination of a long-term insurance policy.
"In order to enable such unregistered person to file application for a refund, in cases where the contract/agreement for the supply of services of construction of flat/ building has been cancelled or where long-term insurance policy has been terminated, a new functionality has been made available on the common portal which allows unregistered persons to take a temporary registration and apply for a refund under the category 'Refund for Unregistered person'," the CBIC expressed.
The unregistered assessee has two years from the effective date, which might be the day they received the goods or services or the day they received the letter cancelling the contract or agreement, to claim reimbursements.
In its 48th meeting on GST Council suggested amending the CGST Rules and issuing a circular to specify the process for unregistered customers to follow when submitting a request for a refund.
In cases where the contract or agreement for the supply of services, such as the construction of a flat or house and long-term insurance policy, is cancelled and the time period for the issuance of a credit note by the concerned supplier has passed, there has not yet been a procedure for claiming a refund of the tax paid by the unregistered buyers.
The unregistered individual must choose the same state or UT where his or her supplier is registered in order to submit a refund claim for an invoice, and they must also submit an Aadhaar authentication request.
The unregistered individual would also need to submit the necessary papers and input the information for the bank account where he want to receive the return of the money claimed.
When a contract or agreement for the supply of services, such as the construction of a flat or house or a long-term insurance policy, is cancelled and the window for the concerned supplier to issue a credit note has passed, a procedure to claim a refund of the GST paid by unregistered buyers has been made available.
Tax experts mentioned that "This will allow the unregistered buyers to get a refund of the GST where supply has not taken place, and will help avoid unnecessary cost burden, and should be perused by the common public facing such instances,".
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