GST Refund allows registered taxpayers to claim back excess taxes paid or accumulated input tax credit (ITC) in specific cases such as exports, inverted duty structure, deemed exports, and other situations. Timely refunds improve cash flow and reduce working capital lock-in.
When Can You Claim a GST Refund?
- Zero-Rated Supplies (Exports & SEZ supplies):
- Export with payment of IGST (claim refund of IGST paid).
- Export/SEZ supply under LUT/Bond (claim refund of accumulated ITC).
- Inverted Duty Structure (higher GST rate on inputs than outputs).
- Deemed Exports (refund to supplier or recipient, as applicable).
- Excess balance in Electronic Cash Ledger.
- Refund of TDS/TCS balance.
- Refund on account of assessment/appeal/any other order.
- Tourist refund (for eligible foreign tourists on goods taken out of India).
Eligibility & Time Limits
- Applicant must be a registered person under GST (except for specific cases like unregistered refund of deposits).
- Time limit: Typically 2 years from the relevant date (varies with the nature of refund).
- No refund of unutilized ITC is allowed for goods/services notified as excluded or where output is nil-rated/exempt (except zero-rated supplies).
Documents Required
- For exports with payment of IGST: Shipping bill, export invoice, EGM/ADP, and proof of receipt of foreign remittance (FIRC/BRC if required).
- For LUT/Bond (without payment of tax): LUT/Bond copy, export invoices, shipping bills, statement of exports (Statement-3/3A), and ITC details.
- For Inverted Duty: Purchase & sales invoices, rate-wise statements, and ITC ledger.
- Deemed Exports: Declaration from recipient (where applicable), proof of payment by recipient, and endorsement/certificates as per notifications.
- GSTR-1, GSTR-3B filings matching the refund period; reconciliations.
- Cancelled cheque/bank mandate for credit of refund.
- CA/CMA certificate (where refund claim exceeds the prescribed threshold) regarding unjust enrichment.
Processing & Timelines
- RFD-02: Acknowledgement of your application (or RFD-03 for deficiency memo).
- Provisional Refund (RFD-04): Up to 90% for zero-rated claims, generally within 7 days from acknowledgment.
- Final Order (RFD-06) and Payment Order (RFD-05): Target within 60 days from receipt of a complete application.
- Delay beyond the prescribed period may attract interest as per law.
Important Calculations (Quick View)
Refund of ITC for Zero-Rated Supplies (without payment):
Eligible Refund = (Turnover of zero-rated supplies × Net ITC) ÷ Adjusted Total Turnover, subject to safeguards/notifications.
Inverted Duty: Refund is limited as per prescribed formula and exclusions for certain notified goods/services.
Common Mistakes to Avoid
- Mismatch between GSTR-1, GSTR-3B, and shipping bill data.
- Claiming in the wrong category (e.g., choosing inverted duty instead of zero-rated).
- Including blocked ITC (Section 17(5)) or ineligible credits.
- Missing LUT/Bond for zero-rated supplies without payment of tax.
- Submitting after the limitation period or without bank/CA certificates where required.
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