Budget Proposals -2023 Series: Asking Questions and Finding Answers [Part VI]
Refund of Tax – Provisional basis [Section 54(6)]
This blog is one of a series of topic-specific FAQs concerning Budget 2023 proposals. It addresses the practical issues raised due to proposed changes.
Vivek Laddha, Manish Gupta, Pooja Patwari
FAQ 1. What is the background of proposed amendment in section 54(6)?
Law Brothers’ View: In the case of any claim for refund on account of zero-rated supply of goods or services or both made by registered persons, law provides the refund on a provisional basis, 90% of the total amount so claimed, excluding the amount of input tax credit provisionally accepted.
It is noticeable that the concept of provisional ITC is done away w.e.f. 01 Oct 2022 vide Finance Act, 2022.
With this the reading has been redundant and thereby it is proposed to omit the wordings ‘excluding the amount of input tax credit provisionally accepted’.
FAQ 2. What is the practical implication of the amendment?
Law Brothers’ View: It is just to align the context and to make a feasible reading of connected provisions.
FAQ 3. What is the practical implication of the amendment?
Law Brothers’ View: It is just to align the context and to make a feasible reading of connected provisions. It is also worth to note that in majority of the cases, 100% amount is being refunded in one go by the department for their administration convenience.