GST Refund: Step-by-step Process to GST Refund Claims

Understanding the GST Refund Process in India

GST, or Goods and Services Tax, is levied on the supply of goods and services in India. It comprises three key components: SGST (State GST), CGST (Central GST), and IGST (Integrated GST). Once you’ve made the required GST payments, you can determine whether you are eligible for a refund. If eligible, you must apply for it using Form RFD-01.

Although the process may seem straightforward, claiming a GST refund is technical in nature. Any errors or delays in filing can result in your application being rejected. Therefore, it is crucial to strictly follow the applicable rules and file the refund form correctly and within the stipulated time. We provide the best GST registration services!

What Is the GST Refund Procedure?

To simplify the process, the GST refund system is now entirely online. You can file your refund application through your registered GST account. The application must be submitted within two years from a specific “relevant date”, which depends on the nature of the refund claim.

Here’s how the relevant date is determined:

• If excess GST was paid by mistake, the relevant date is the date of payment.
  
  

• For exports or deemed exports, it is the date when goods were dispatched, loaded, or crossed the border.
  
  

• In cases where Input Tax Credit (ITC) has accumulated because the final output is exempted or zero-rated, the relevant date is the last day of the financial year for which the credit applies.
  
  

• If a provisional assessment leads to GST overpayment, the relevant date is the date of tax adjustment.
  
  

To avoid rejection, ensure that your refund request is filed within the two-year window based on the relevant date.

When Can a GST Refund Be Claimed?

Taxpayers in India are eligible to claim a GST refund under various circumstances, including:

• If GST was overpaid due to an error or oversight.
  
  

• When unutilized Input Tax Credit (ITC) arises from exporting goods or services or through deemed exports.
  
  

• If IGST is paid on export of services with payment of tax.
  
  

• On purchases made by foreign embassies or UN bodies.
  
  

• When ITC accumulates because tax on inputs is higher than that on outputs—commonly known as an inverted duty structure.
  
  

• In cases where a provisional assessment, appeal, or final order reveals excess tax was paid.
  
  

• International tourists are allowed to claim a GST refund on goods purchased in India upon departure.
  

What Is the Time Limit for Claiming a GST Refund?

Steps to Submit the GST Refund Pre-Application Form

Before initiating a GST refund claim, taxpayers must first complete the mandatory Refund Pre-Application Form. This form captures key business information such as the Aadhaar number, income tax history, export details, expenses, and investment records. Note that the actual GST refund invoice can only be filed after this form is submitted.

The form cannot be altered once submitted and does not require a digital signature, so it is essential to ensure accuracy while filling it.

How to Complete the GST Refund Pre-Application Form

Taxpayers must first submit the Refund Pre-Application Form before proceeding with a refund claim. This document gathers vital data like Aadhaar, export turnover, income tax paid, business expenses, and investment details. Submission of this form is a prerequisite, and changes are not allowed after it is filed. A digital signature is not needed, but accuracy is critical.

Follow These Steps:

Step 1: Visit the official GST portal. Navigate to ‘Services’ > ‘Refunds’ > ‘Refund Pre-Application Form’.

Step 2: Enter the necessary information and click ‘Submit’. A confirmation message will appear.

Key Information Required:

• Type of business (e.g., manufacturer, trader, exporter, service provider)
  
  

• Date of issue of Import Export Code (IEC), if applicable
  
  

• Aadhaar number of the primary authorized signatory (mandatory)
  
  

• Total export value for FY 2019-20 based on GSTIN (for exporters)
  
  

• Income tax paid in FY 2018-19
  
  

• Advance tax paid in FY 2019-20
  
  

• Investment and capital expenditure for FY 2018-19
  
  

This step helps verify eligibility and accelerates the refund process. Double-check all entries to avoid errors.

Process to Claim GST Refund

Taxpayers seeking a GST refund must adhere to a structured process as outlined below:

Step 1: Submission of Form RFD-01
Form RFD-01 must be filed within two years from the relevant date, duly certified by an authorised Chartered Accountant. The relevant date depends on the nature of the transaction—such as the date of goods export or completion of services. Delays beyond this timeframe may lead to rejection of the refund claim.

Step 2: Generation of Form RFD-02
After successful submission, an acknowledgment in Form RFD-02 is automatically generated and sent via email and SMS for recordkeeping.

Step 3: Rectification through Form RFD-03
If discrepancies or deficiencies are found in the application, taxpayers must correct them using Form RFD-03.

Documents Required for GST Refund

The documents required for a GST refund depend on the nature of the claim. Below are the standard requirements for various scenarios:

1. GST Refund on Exports
For claims related to exports or SEZ supplies, provide:

• Invoice of the relevant transaction
  
  

• Statement detailing export/shipping bills with corresponding invoice numbers and dates
  
  

• In case of export of services, submit tax invoices and bank certificates proving foreign currency receipt
  
  

2. GST Refund on Supplies to SEZ
When supplying to SEZ units, the following are needed:

• Endorsement from the designated officer confirming goods/services were received in the SEZ
  
  

• Copy of the tax invoice
  
  

• Declaration from the SEZ unit that input tax credit has not been availed
  
  

3. GST Refund for Accumulated ITC
To claim a refund for unutilised Input Tax Credit:

• Submit a detailed invoice statement in accordance with GST guidelines
  Note: Refunds are not permitted for ITC on construction services intended for sale or when the input tax rate exceeds the output tax rate.
  
  

GST Refund Based on Legal Orders or Judgments

If your GST refund claim arises due to a ruling or judgment from a court or authority, you must submit:

• The reference number of the issued order
  
  

• Supporting tax invoices
  
  

Refund Under Inverted Duty Structure

In cases where the input tax rate exceeds the output tax rate, you can claim a refund by providing:

• A detailed statement listing invoice numbers and dates for both inward and outward supplies for the relevant tax period
  
  

Refund Due to Reclassification of Supply

When a supply initially treated as intra-State is later determined to be inter-State (or vice versa), submit:

• A statement containing complete transaction details reflecting the change in supply nature
  
  

Make sure all documentation is accurate and complete to prevent delays in processing your GST refund.

IGST Refund on Export of Goods (With Tax Payment)

To claim a refund of IGST paid on exports, follow this procedure:

• File a valid Shipping Bill or Bill of Export
  
  

• Accurately declare the IGST paid for the export in the relevant documents
  Once Customs verifies the export and acknowledges receipt, you may apply online through the GST portal. Upon verification, the refund is credited directly to the exporter’s bank account, helping maintain healthy cash flow and promote exports.
  
  

Calculating GST Refund

For example, if Mr. B was required to pay ₹50,000 as GST in September but mistakenly paid ₹5,00,000, he overpaid by ₹4,50,000. He is entitled to claim the excess amount as a refund within two years from the payment date.

How to Check GST Refund Status Online

You can track your GST refund using two options:

1. With Login:

• Log into the official GST portal
  
  

• Go to the ‘Services’ section
  
  

• Choose the refund year and verify your bank account
  
  

• Detailed refund status will be shown
  
  

2. Without Login:

• Visit the GST portal
  
  

• Select ‘Track Application Status’
  
  

• Enter your ARN (Acknowledgement Reference Number)
  
  

• View the current status instantly
  
  

For IGST export refund tracking, log in, select the fiscal year and quarter, and input the invoice data for full updates.

Three Stages of GST Refund Status

Step 1: Application Submission
Taxpayers must file a refund application online via the GST portal, including refund amount, applicable tax period, and all necessary documents.

Step 2: Processing by Authorities
GST officials will evaluate the application. If needed, they may request additional details. Once validated, the refund is approved for transfer.

Step 3: Refund Approval
Once sanctioned, a confirmation is issued and the refund amount is credited to the taxpayer’s bank account. Applicants can monitor each stage by logging into the portal for updates or queries raised by the department.

What Happens After You Apply for a GST Refund?

Once a taxpayer submits a GST refund application, it appears on the dashboard of the concerned tax or refund officer as a pending task. The officer is responsible for scrutinizing the application and reviewing the attached documents for accuracy and eligibility.

Applicants can monitor their application progress using the “Track Application Status” feature available under the Refunds section on the GST portal. After verification, if everything is in order, the sanctioned refund amount is transferred to the applicant’s registered bank account.

Actions Taken by the GST Officer:

• Provisional Refund: In certain cases, a provisional refund is processed through Form RFD-04. This is to be issued within 7 days from the date of acknowledgment, with up to 90% of the claimed amount released.
  
  

• Acknowledgment Issuance: If the application is complete, the officer issues Form RFD-02 as an acknowledgment within 15 days from the date of submission.
  
  

• Application Withdrawal: If needed, the applicant can withdraw their refund claim using Form RFD-01W. Any debited amount from the electronic credit or cash ledger is then credited back.
  
  

• Deficiency Memo: If discrepancies are found, a deficiency memo is issued in Form RFD-03 within the same time period. If the refund amount had been debited, it is automatically re-credited to the ledger. A new application must be filed.
  
  

• Clarification Notice: In cases requiring more information or in instances where the refund may be ineligible, the officer issues a notice via Form RFD-08. The applicant must respond within 15 days using Form RFD-09.
  
  

• Sanction or Rejection: Based on the review, a final decision is issued in Form RFD-06. If approved, a payment order is released through Form RFD-05. In some cases, RFD-05 may follow the provisional refund in Form RFD-04.
  
  

• Withholding of Refund: If the refund is to be withheld, an order is passed using Form RFD-07 (Part B). In such instances, Form RFD-05 will not be issued.
  
  

• Re-credit Order: If the refund is rejected or partially granted, the unapproved amount is re-credited through Form PMT-03 to the taxpayer’s electronic cash or credit ledger.
  
  

Conclusion

Think of your business like a puzzle—and occasionally, you may overpay on taxes. To reclaim those extra “pieces,” you must follow a specific set of steps. With the right documentation and a proper filing process, you can recover the excess GST you’ve paid.

While awaiting the refund, if working capital becomes tight, consider a short-term business loan to maintain smooth operations. To ease cash flow issues, the government has digitized the entire GST refund process—application, submission, tracking, and payment—making it faster and more efficient for manufacturers, exporters, and other taxpayers.