GST Refund and Standardization of Procedure with eligibility and time limit

Published On: Dec 15, 2020Last Updated: Oct 14, 20234.7 min read

When the taxpayers pay more tax than they owe, they are bound to receive the refund of the extra/additional tax they paid. Such a tax receipt is known as a tax refund and it applies to GST as well which is known as GST refund.

The refund mechanism has to be prompt for efficient tax administration. It makes trade easier via the release of blocked funds for expansion, working capital, and already established business modernization. The provisions concerning refunds in the GST law aim to standardize and streamline the refund procedures beneath the GST regime. Hence, there shall be a standardized form for making any claim for refunds beneath the GST regime.

Also Read: How to Claim GST Refund & Apply for GST No. Cancellation

The claiming and sanctioning procedure will be wholly online and time-sensitive which is a marked departure from the existing cumbersome and time-consuming procedure. Nonetheless, it has been determined that since the online refund module is not available instantly, the refund process would be administered manually, and circular no. 17-17-2017-GST dated 15-11-2017 and circular no. 24-24-2017-GST dated 21-12-2017 ordering the detailed procedure has been issued.

About GST Refund

CGST act, 2017, provision mentioned in section 77 of the said act and the desideratum of filing pertinent documents as given in rule 89(2) of CGST act, 2017 is signal of various situations that may require a refund claim. A refund claim may arise on account of the following.

– Export of goods or services

– Supplies to special economic zones (SEZs) units and developers

– Deemed export supplies

– Refund of taxes on purchases made by the UN and Embassies so on and so forth

– Refund arises on the decree, judgment, order, or direction of the appellate tribunal, appellate authority, or any court

– Accumulated input tax credit’s refund on account of inverted duty structure

– Completion of provisional assessment

– Pre-deposit’s refund

– Surplus payment due to mistake

– International tourist’s refunds of GST paid on goods in India and taking it along with them abroad when their departure from the country (India)

– Refund on account of issuance of refund vouchers for paid taxes on advances against which good or service have not been supplied

– Paid CGST and SGST’s refund by treating the 283 supply as an intra-state supply which is in due course held as inter-state supply and vice versa

Thus practically every situation is covered. The GST law requires that every claim for refund is to be filed within 2 years from the relevant date.

Standardization of procedure

GST laws make standardized provisions for making a refund claim. Every claim has to be submitted online in a standardized form. This application shall be passed on to the proper officer, who will inspect the application for its wholesomeness within 15 days of submission of said application. When it is found to be whole in all terms, an acknowledgment will be made available to the applicant via a common electronic portal. Nonetheless, until the refund module on the GSTN portal is functionalized, manual submission of refund claims has been provided. The refund amount’s claim kept in the cash ledger’s credit balance can also be made in monthly returns.

The proper officer has to check whether there is any deficiency or not, if there is any, in that case, the claim will be sent back to the applicant along with pointed deficiency and he/she can submit a refund claim again after correcting it. If the claim is in order, it has to be sanctioned within 60 days period from the application receipt date of claim complete in all respect.

Also Read: How to Claim GST Refund & Apply for GST No. Cancellation

If this stipulated period is surpassed, interest at the rate of 6% (9% in case of refund made on order passed by an arbitrating authority or appellate court or tribunal which has achieved finality) will become payable along with refund from the expiry of 60 days till the date of payment of the reimbursement. Nonetheless, if the refund claim is on account of a pre-deposit made before any appellate authority, the interest has to be paid from the date of making such payment.

Applicant’s eligibility for obtaining a GST refund

A refund will be paid to the applicant if such amount is relatable to the following criteria-

  1. Amount paid by the applicant of refund of interest and tax or any other amount + he had not passed such interest and tax to any other individual.
  2. Interest or tax carried by such other class of applicants notified by central or state government on the council’s recommendations.

On receipt of any application, if the proper officer is convinced that the whole or some part of the amount claimed as refund is not eligible for a refund, then he/she may pass an order accordingly, and the amount so decided will be credited to the consumer welfare fund.

The time window to grant a refund

Refund order has to be authorized within 90 days of the period from the date of receipt of the application.

Suppose within three months from the date of receipt of the application; the amount is not refunded. In that case, interest at such rate, maybe mentioned in the notification issued by central or state government on council’s recommendation, will be payable in respect to such refund from date straightaway after the expiry of due date till the refund date of such tax.


To sum up, the law anticipates a straightforward, time-bound, and technological refund process with minimum human interface betwixt the taxpayer and authorities. 

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Shreeda Shah
About the Author

Shreeda Shah

Shreeda Shah is a Chartered Accountant associated with as a Business Advisor. She has a good expertise over Direct Taxation and Indirect Taxation compliances.