Refund Process under GST

It is very important that the Refund Process under GST remains a smooth one. If there are issues in getting asmooth refund under GST, the manufacturers and the exporters may face great difficulty and challenges in maintaining the working capital and cash flow.

Presently there is a delay in months in providing the refund to the exporters and manufacturers. There should be a strict regulation in theprocessing of the refund under GST.

Situations for Refund Under GST

  • When excess payment of tax is paid due to inadvertence or mistake.
  • When Export (including deemed export) of goods or services under aclaim of rebate or Refund of accumulated input credit of duty or tax when goods or services are exported.
  • During finalization of theinterimassessment.
  • When the refund of the pre-deposit for filing an appeal including refund arising in pursuance ofthe order of an appellate authority when the appeal has been decided in favor of the appellant.
  • When payment of duty or tax during theinvestigation but no or less liability arises at the time of finalization of adjudication or investigation.
  • Refund of payment of tax on purchases made by the Embassies or UN bodies.
  • When credit accumulation due to output is being tax exempted or nil-rated.
  • When credit accumulation due to inverted duty structure i.e. due to tax rate differential between input and output.
  • When incentives are provided by the supplier through the credit notes either annually or based on volmes.
  • When Tax Refund is made for International Tourists.

Refund Process Under GST

Enlisted below is the procedure for processing of refund claimed:

  • An application form for claiming refund needs to be filed through the GSTN portal.
  • An acknowledgment number will be shared with the applicant through email or SMS, once the application has been filled through an online process.
  • The adjustments will be made in order to return and a cash ledger will be facilitated to reduce the “carry-forward input tax credit” automatically.
  • The refund application and documents that will be submitted shall be examined within a period of 30 days of filing the refund application form.
  • The concept of “unjust enrichment” will be scrutinized for every refund application. If the application does not qualify, then the refund would be transferred to Consumer Welfare Fund (CWF).
  • If refund claimed surpasses the predetermined amount of refund, then it will undergo a pre-audit process for sanctioning the refund.
  • The refund will be credited electronically to the account of theapplicant through NEFT, ECS, or RTGS.
  • The application for refund can be made on a quarterly basis.
  • No refund will be provided for an amount less than Rs 1000/-.

Delay in Refund and Interest

As per the GST law and recommendations made by the Subramanian committee, a refund application will be processed within a period of 90 days, however if the refund application does not get processed within the period of 90 days then a rate of interest of 6% has been recommended.

As per NirmalaSitharaman - The Commerce and Industry Minister who raised a concern for the exporters facing the problem of delay in getting refunds, the refunds will be processed within a period of 7 days under the GST. If the same is delayed for more than 2 weeks out of any reason, then the refund will be provided along with the interest.


Keeping in view the loss faced by the manufacturers and exporters on account of delay in processing the refund a better system has been put into place and the refund process under GST is now expected to be a faster and smoother process. The good news is that since the entire refund process will be done electronically and all the data uploading will be doneelectronically, the verification and scrutinization of refund applications will be relatively smoother and faster.