🔹 Introduction

Refund under GST is a critical process that ensures businesses are not burdened with excess taxes. Whether it is exports, inverted duty structure, excess payments, or refunds from the cash ledger, timely claiming of refunds is vital for working capital management. However, refund applications are often rejected due to errors, lack of documents, or missed timelines.

This article provides a detailed law + process guide for GST refunds in 2025.

(References: Sec. 54–54A of CGST Act, Rules 89–97A, Circulars updated till 2025)

🔹 Types of GST Refunds

1. Refund of excess balance in Electronic Cash Ledger

   • Example: Advance tax deposited but not utilized.

2. Refund of excess tax paid

   • Example: Wrongly paid IGST instead of CGST+SGST.

3. Refund of ITC on exports (without payment of tax)

   • Zero-rated supplies (exports/SEZ).

4. Refund of IGST on exports (with payment of tax)

   • Based on shipping bill + GSTR-1 data.

5. Refund of ITC under Inverted Duty Structure

   • Input tax > Output tax (e.g., textile, footwear industries).

6. Refund on deemed exports

   • Supplies to EOUs, Advance Authorization holders.

7. Refund on account of provisional assessment, appeal, or order.

🔹 Legal Provisions

• Sec. 54 of CGST Act: General refund provisions.

• Sec. 54A (inserted by Finance Act 2023): Restriction on unjust enrichment principle in specific refunds.

• Rules 89–97A: Detailed procedure for filing.

• Time Limit: Refund application must be filed within 2 years from relevant date.

🔹 Step-by-Step Process to File Refund (FORM GST RFD-01)

📌 Step 1: Login to GST Portal
Go to Services → Refunds → Application for Refund

📌 Step 2: Select Refund Type
Choose applicable category (Excess cash ledger, Export, Inverted duty, etc.)

📌 Step 3: Enter Refund Details

• Period of refund

• Amount of tax (CGST, SGST, IGST, Cess)

• Balance available in ledger

📌 Step 4: Upload Supporting Documents

• Invoice details (JSON upload)

• Statement 2 (Inverted duty)

• Statement 3 (Exports without payment)

• Statement 4 (Deemed exports)

• Shipping bills, LUT/Bond copies (for exports)

📌 Step 5: Submit Application
File using DSC/EVC → ARN generated.

📌 Step 6: Processing by Officer

• Provisional refund within 7 days (90% of claim for exporters).

• Final refund within 60 days.

📌 Step 7: Refund Order & Credit

• Refund sanctioned in RFD-06 order.

• Credited to taxpayer’s bank account.

🔹 Documents Required

• GST RFD-01 application

• GSTR-1 & GSTR-3B returns for relevant period

• Shipping bills / Export invoices

• Bank realization certificate (in some cases)

• Statement of invoices (Rule 89)

• Declaration under Sec. 54 (no unjust enrichment)

🔹 Common Reasons for Rejection of Refund

1. Mismatch between GSTR-1 and shipping bills.

2. Delay in filing beyond 2 years.

3. Wrong selection of refund type in RFD-01.

4. Non-submission of documents.

5. Ineligible claim under inverted duty (e.g., when output is nil-rated/exempt).

⚠️ Example: A textile trader claims refund under inverted duty, but output supply is exempt → Refund rejected.

🔹 Practical Examples

1. Export Refund (IGST Route):
   A Delhi exporter files GSTR-1 & shipping bill with IGST paid. Refund auto-credited within 10–15 days.

2. Export Refund (LUT Route):
   A Noida exporter supplies under LUT (no tax payment). Files RFD-01 with Statement 3 + shipping bills. Refund sanctioned after verification.

3. Inverted Duty Refund:
   A Ghaziabad manufacturer pays 12% GST on inputs but output attracts 5% GST. Claims refund of unutilized ITC under Rule 89(5).

🔹 Best Practices for Refund Compliance

• ✅ File refund claims within 2 years.

• ✅ Ensure invoices & shipping bills match with GSTR-1.

• ✅ Use correct refund category in RFD-01.

• ✅ Keep reconciliations ready.

• ✅ Track application status regularly on portal.

🔹 FAQs on GST Refunds

Q1. Can NIL refund applications be filed?
➡️ Yes, to record claim within 2 years, even if refund amount is zero.

Q2. How much time does refund take?
➡️ Generally 60 days, exporters may get 90% provisional refund in 7 days.

Q3. Is interest payable on delayed refund?
➡️ Yes, 6% per annum if refund not sanctioned within 60 days.

Q4. Can refund be claimed if supplier did not upload invoice?
➡️ No, ITC must be reflected in GSTR-2B.

Q5. Can refund be adjusted against dues?
➡️ Yes, refund will first adjust outstanding demand, balance credited.

🔹 Conclusion

Refunds are a lifeline for exporters and manufacturers dealing with inverted duty. With timely filing, correct category selection, and proper documentation, refunds can be secured smoothly. Errors, however, lead to delays and working capital crunch.

📌 Need help with GST refunds, documentation, or appeal against rejection?
Contact Tech-Tax Solutions – Quality, Trust & Expertise in Ghaziabad, Noida & Delhi.