Amount Available in Cash Ledger- How to claim Refund

The electronic cash ledger is maintained in FORM GST PMT-05 on the common portal for crediting the amount deposited and debiting the payment therefrom towards tax, interest, penalty, fee or any other amount. It can be accessed under the post-login mode on the GST portal under Services > Ledgers > Electronic Cash Ledger. Sometimes the amount available in the electronic cash ledger is not fully utilised for the payment of tax, interest, penalty etc. Hence a question arises whether refund would be available of such amount available in the Cash Ledger. In this article we will discuss the same and also discuss the procedure of claiming the refund of said amount.

The sub section 6 of section 49 of CGST Act 2017 states that the balance available in the electronic cash ledger or electronic credit ledger after payment of tax, interest, penalty, fee or any other amount payable under this Act or the rules made thereunder may be refunded in accordance with the provisions of section 54.

For claiming the refund of any balance in the electronic cash ledger the application should be filed electronically in FORM GST RFD-01 through the common portal.

No Time Restrictions and some other relaxations for claiming the refund of excess balance in electronic cash ledger.

It is important to note that section 54(1) of CGST Act 2017 states that any person claiming refund may make an application before the expiry of two years from the relevant date. Hence a question arises whether for claiming the refund of balance available in the cash ledger the time limit of two years would be applicable or not.

The same was clarified by the CBIC in the Circular no. 166/22/2021 that the provisions of sub-section (1) of section 54 of the CGST Act regarding time period, within which an application for refund can be filed, would not be applicable in cases of refund of excess balance in electronic cash ledger. Thus it is clear that there would not be time restrictions for claiming the refund of the balance available in the cash ledger.

In the said circular some other points related to the refund of balance of cash ledger was also clarified in serial number 2 of said circular that the requirement of furnishing of certification/ declaration under Rule 89(2)(l) or 89(2)(m) of the CGST Rules, 2017 for not passing the incidence of tax to any other person is not required in cases of refund of excess balance in electronic cash ledger as unjust enrichment clause is not applicable in such cases.  Vide serial number 3 of the said circular, it has also been clarified that the amount deducted/collected as TDS/TCS by TDS/ TCS deductors under the provisions of section 51/52 of the CGST Act and credited to electronic cash ledger of the registered person, is equivalent to cash deposited in electronic cash ledger.  Thus any amount, which remains unutilized in electronic cash ledger, after discharge of tax dues  can be refunded to the registered person as excess balance in electronic cash ledger.

Common reason due to which the excess amount is available in the Cash Ledger:
Maintaining a balance in the Electronic Cash Ledger is necessary to meet GST obligations, sometimes the balance may accumulate more than what is immediately required. The Common reason for an excess balance in the Electronic Cash Ledger is TDS or TCS Credit. When the TDS is deducted by the recipient and such recipient files GSTR-7 and when the supplier accepts the same on the portal then such amount of TDS would be reflected in the cash ledger of the supplier.

How to file refund application:
The Following steps need to be followed while filing the refund of the amount available in the cash ledger:
1. Login to GST portal for filing refund application under refunds section.

2. Navigate to Services > Refunds > Application for Refund option.

3. Select the reason for Refund as ‘Refund on account of excess balance in cash ledger’. File refund application in GST RFD-01.

4. The amount available in Electronic Cash Ledger would be auto-populated in the refund application in a matrix.

5. Mention the amount of refund to be claimed in GST RFD-01 in the refund claimed table and file the form.

6. Application for refund can be saved at any stage of completion for a maximum time period of 15 days from the date of creation of refund application. If the same is not filed within 15 days, the saved draft will be purged from the GST database. To view your saved application, navigate to Services > Refunds > My Saved/Filed Applications option.

7. Once the refund application is filed the GST portal will generate an ARN and display it in a confirmation message, indicating that the refund application has been successfully filed.

8. The said ARN will be sent to the e-mail address and SMS of the registered taxpayer.

9. GST Portal also makes a Debit entry in the Electronic Cash Ledger for the amount claimed as refund.

Transfer of Amount In Electronics Cash Ledger Through PMT-09

PMT-09 is a form that allows taxpayers to make adjustments or transfer amounts within different heads of the Electronic Cash Ledger. This transfer is typically used when taxpayers need to rectify a previous payment made under the wrong tax head or when they have an excess balance in one tax head and need to use it for another.

The following steps are involved in transferring an amount in the Electronic Cash Ledger through PMT-09:

1. Log in to the GST Portal.

2. After login, go to the "Services" tab and select "User Services." under the "User Services" section, you will find the option for "Furnish PMT-09."

3. Fill in the PMT-09 Form: Complete the PMT-09 form with the following information:

Disclaimer: The information given in this article is solely for purpose of understanding the law. It is completely based on the interpretation of the author and cannot be constituted as a legal advise, the author of this article and Lawcrux team is not responsible for any legal issues if arises on the basis of the interpretation given above.