GST is a tax on goods and services in India. It has three components: SGST, CGST and IGST. After making the necessary GST payments, you will know whether you will receive a refund or not. If eligible, you will have to file for the reimbursement using the GST refund form RFD-01. As simple as it may sound, the GST refund process is technical. A delay or incorrect filing will lead to a rejection of your refund request. Thus, follow the terms and conditions of the GST refund and file the form accurately and on time.
Tip: If you're looking for financial flexibility for your business, you can also check your business loan eligibility.
Additional read: How to verify your GSTIN.
What is the GST refund process?
To simplify the process of GST refund, the income tax authorities have translated it into an online process. This means you can claim a refund online using your registered GST account anytime within two years from the relevant date. The relevant date differs based on the condition of your claim. So, abide by the GST refund dates as mentioned below to claim your refunds on time.
- If you are claiming a refund for excess payment of GST, your date of payment becomes the relevant date.
- If you are claiming a refund for export or deemed export of goods or services, the date of despatch/ loading/ passing the frontier becomes the relevant date.
- If Input tax credit (ITC) accumulated as output is tax-exempt or nil, the last date of the financial year to which the credit belongs becomes the relevant date.
- If you pay excess basis the finalisation of provisional assessment, the date on which tax is adjusted becomes the relevant date.
Additional read: What taxes has GST replaced?
When can the GST refund be claimed?
Taxpayers are eligible to claim a GST refund under the following circumstances:
- When excess tax is paid or deposited due to mistakes or system-related errors
- In cases where input tax credit (ITC) accumulates as a result of exports or deemed exports of goods or services
- When IGST is paid on the export of services with tax payment
- For purchases made by foreign diplomatic missions, UN agencies, or embassies
- When there is an accumulation of ITC under the inverted duty structure, where the tax on inputs is higher than the tax on outward supplies
- Upon finalisation of a provisional assessment, reassessment, appeal, or any other legal order where tax was deposited in advance
- When international tourists apply for a GST refund on goods purchased in India while departing the country
What is the time limit for claiming the refund?
Reason for claiming GST refund |
Relevant date |
Excess payment of GST |
Date of payment |
Export or deemed export of goods or services. |
Date of dispatch/ loading/ passing the frontier. |
ITC accumulates as output is tax-exempt or nil-rated. |
Last date of the financial year to which the credit belongs. |
Finalisation of provisional assessment. |
The date on which the tax is adjusted. |
Steps to submit the GST refund pre-application form
Before applying for a GST refund, taxpayers are required to complete the Refund Pre-Application Form. This form collects essential business details including Aadhaar number, income tax history, export-related data, expenses, and investment information. Importantly, the original GST refund invoice must be filed only after this form is submitted.
Submission of the pre-application form is mandatory and must be completed before filing the actual GST refund application. Once submitted, the form cannot be edited or modified, and it does not require a digital signature. Therefore, it is crucial to enter all information carefully and accurately.
How to fill the GST refund pre-application form:
- Step 1: Visit the official GST portal. Under the ‘Services’ section, go to ‘Refunds’ and select ‘Refund pre-application form’.
- Step 2: Complete the required fields on the form and click ‘Submit’. A confirmation message will appear once your form is successfully submitted.
Information required in the pre-application form:
- Nature of business (e.g. manufacturer, trader, merchant exporter, or service provider)
- Date of issue of Importer Exporter Code (IEC) - required only if you are applying for export-related refunds
- Aadhaar number of the primary authorised signatory
- Value of exports in financial year 2019-2020 at the GSTIN level (only for exporters)
- Income tax paid during financial year 2018-2019
- Advance tax paid during financial year 2019-2020
- Details of investments and capital expenditure made in financial year 2018-2019
Carefully reviewing and completing this form ensures that your refund application process proceeds smoothly.
Steps to claim GST refund
To claim a GST refund, taxpayers need to follow a specific procedure outlined as follows:
Step 1: Filing Form RFD-01
Taxpayers must file Form RFD-01, certified by an authorised Chartered Accountant, within 2 years of the relevant date. The relevant date varies depending on the case, such as the departure of goods or completion of services. Failing to adhere to the timeframe may block credit.
Step 2: Auto-Generation of Form RFD-02
Upon filing, details and acknowledgment are auto-generated in Form RFD-02, sent via email and SMS for future reference.
Step 3: Correction with Form RFD-03
If faults or shortages occur in the application, taxpayers must rectify them by filing Form RFD-03.
Documentation for GST refund
When applying for a GST refund, you must provide specific documents depending on the reason for your refund. Here's a simple breakdown of the documents required for different types of GST refund claims:
GST refund for exports
If your refund claim relates to exports or supplies to SEZs, the following documents are needed:
- Copy of the invoice for the exported goods or services
- Statement with the number and date of shipping bills or bills of export, along with corresponding export invoices
- For services: Tax invoice and bank realisation certificate showing foreign currency receipt
Export of goods
- Statement showing the number and date of shipping bills
- Number and date of export invoices
Export of services
- Statement with invoice numbers and dates
- Bank realisation certificate or foreign inward remittance certificate
Deemed exports
- Statement showing invoice numbers and dates
- Any additional supporting documents as notified
GST refund for supply to SEZ
If you are claiming a refund for supplies made to an SEZ unit or developer, submit the following:
- Endorsement from the SEZ Proper Officer confirming receipt of goods or services
- Copy of the tax invoice
- Declaration from the SEZ unit that input tax credit has not been claimed
GST refund for accumulated input tax credit (ITC)
When the refund claim is only for unutilised ITC:
- Statement with invoice details as required under GST rules
Important notes:
- No refund is allowed for unutilised ITC on CGST and IGST paid for construction services intended for sale
- No refund is allowed when ITC is accumulated due to a higher input tax rate compared to the output supply tax rate
GST refund based on an order
If your refund claim is based on a court or appellate order:
- Reference number of the court or authority order
- Copy of the relevant tax invoices
GST refund under inverted duty structure
In this case, where input tax is higher than the output tax:
- Statement with the number and date of all invoices issued and received during the relevant tax period
GST refund due to change in supply nature
If your supply was initially treated as intra-state but later classified as inter-state:
- Statement showing complete details of such transactions
Refund process of IGST paid on export of goods (with tax payment)
The refund process for Integrated Goods and Services Tax (IGST) paid on the export of goods involves several steps to ensure seamless reimbursement. Exporters must first file a valid export declaration (Shipping Bill/ Bill of Export) and correctly declare IGST payment against their exports. Once the Customs authorities verify the documents and acknowledge receipt of the exported goods, the IGST refund claim can be filed online through the GST portal. The application undergoes scrutiny for correctness and completeness, after which the refund amount is processed and disbursed directly into the exporter's bank account. This process aims to expedite cash flow for exporters and encourage international trade.
If you are seeking additional working capital during this period, you could also check your pre-approved business loan offer to help manage any immediate expenses.
How to calculate GST refund
Let’s consider a simple example to understand how GST refund works in case of excess payment. Ravi, who runs a small trading business, had a GST liability of Rs. 50,000 for the month of September. However, due to an error while filing, he accidentally paid Rs. 5,00,000 instead. This means he ended up paying Rs. 4.5 lakh more than required. Ravi is eligible to claim this extra amount as a GST refund. To do so, he must apply for the refund within 2 years from the date of making the payment.
How to track GST refund status online?
To track GST refund status online, individuals have two methods:
1. Post-Login Tracking: After logging into the official GST Portal and you can visit our page how to login GST portal for easy login process, then after login navigate to the Services tab, select the desired year, and confirm the bank account. This method provides detailed status information.
2. Pre-Login Tracking: Visit the GST portal, click 'Track Application Status', and enter the ARN without needing to log in. This offers a quick check on refund status. You can visit our page on how to check GST registration to learn how to verify GST registration status.
Additionally, for refunds on IGST paid on exports of goods, a specific login process is required, including selecting the fiscal year and quarterly files, along with entering invoice details for comprehensive status updates.
What are the 3 stages of GST refund status?
The three stages of the GST refund process are as follows:
Step 1: Submit a refund request
The GST refund process begins when a taxpayer submits a refund request. This can be done online through the GST portal. The application should include all necessary details, such as the amount of the refund, the tax period for which the refund is being claimed, and any required supporting documents.
Step 2: Processing your refund application
In the second stage, the GST authorities will process the refund request. They may ask the taxpayer for more information or clarification if needed. Once the request is reviewed and approved, the refund amount will be transferred to the taxpayer’s bank account.
Step 3: Refund confirmed
The final stage is when the GST authorities approve the refund. After approval, they will issue a confirmation order and the refund amount will be credited to the taxpayer’s bank account. Taxpayers can track the status of their refund application at each stage by logging into the GST portal, which will provide regular updates, including requests for any additional information or clarification.
What happens after applying for a GST refund?
When a taxpayer or refund applicant submits a refund application, it will appear on the dashboard of the tax officer or refund processing officer as a pending task. The officer will review and verify the application along with the submitted documents.
The status of the filed applications can be tracked using the “Track Application Status” option under Refunds. After inspection by the GST authorities, the refund amount will be credited to the applicant's bank account.
Here are the actions taken by the officer:
- Provisional refund: In some cases, a provisional refund can be granted using Form RFD-04. This must be issued within 7 days from the acknowledgement date, with at least 90% of the claimed refund granted
- Acknowledgement: If the refund application is complete, an acknowledgement in Form RFD-02 will be issued within 15 days from the filing of the application
- Withdrawal of application: If the applicant wishes to withdraw the refund application, they can do so using Form RFD-01W. Once submitted, the refund amount, which was previously debited from the taxpayer’s electronic credit or cash ledger, will be credited back to the respective ledger
- Deficiency memo: If there are any issues with the application, the officer can issue a deficiency memo in Form RFD-03 within the same time limit. If the refund was debited from the taxpayer’s ledger at the time of filing, an auto re-credit will be made to the electronic cash or credit ledger. A fresh application must be submitted to rectify the issues
- Clarification notice: If the officer needs clarification, they can issue a notice in Form RFD-08 for rejecting the application or recovering a refund granted by mistake. The applicant must respond within 15 days using Form RFD-09
- Sanction or rejection order: After reviewing the application, the officer will issue a sanction or rejection order in Form RFD-06. If the refund is approved, a payment order will be passed in Form RFD-05, or sometimes, RFD-05 is issued after RFD-04
- Withholding refund: In some cases, the officer may pass an order to withhold the sanctioned refund in Form RFD-07 (part-B). In these cases, Form RFD-05 will not be issued
- Re-credit of refund: If the refund is rejected or if a provisional refund was granted, an order for re-crediting the refund amount to the taxpayer’s electronic cash or credit ledger will be passed in Form PMT-03
Conclusion
Imagine your business as a large puzzle, and sometimes you accidentally pay extra pieces, like taxes. To get those extra pieces back as your GST refund, you need to follow the puzzle's instructions (tax rules). Collect your proof (invoices), show where you paid extra, and your refund will be sorted out!
However, delays in processing GST returns can affect manufacturers’ cash flow and working capital. To avoid this, the GST application, claim, payment, and refund process has been made available online, making it quicker and smoother. This allows manufacturers, sellers, and exporters to easily file their GST refund claims and track their refund status directly from their computer.
Additional read: What is GSTR?
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Additional read: What is GSTR-3B
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