GST Refund Process: How to Claim a Refund on the GST Portal

A GST refund is money the government owes you back — usually because you exported without paying tax, because your inputs carry a higher GST rate than your outputs, or because you paid more than you owed. Refunds are fully online through Form RFD-01, but they are document-heavy and time-limited, and errors send the application back to the start.

This guide explains who can claim, the time limit, the main refund types, the step-by-step portal process and the mistakes that delay money.

When can you claim a GST refund?

Section 54 of the CGST Act covers refunds. The most common situations for small and mid-sized businesses are:

Refund type	Situation	Legal basis
Export of goods/services under LUT (without paying IGST)	Unutilised ITC on zero-rated supplies	Section 54(3)(i)
Supplies to SEZ under LUT	Unutilised ITC on zero-rated supplies	Section 54(3)(i)
Inverted duty structure	ITC piles up because input rate is higher than output rate	Section 54(3)(ii)
Excess balance in cash ledger	Tax deposited but not needed	Section 54(1) proviso, Section 49(6)
Excess tax paid by mistake	Paid IGST instead of CGST+SGST, or the reverse	Section 54, Section 77
Export of services with payment of IGST	Refund of IGST paid	Section 54 / IGST Act
Deemed exports	Supplier or recipient claims	Section 54
Refund to UN bodies and embassies	Tax paid on inward supplies	Section 54(2)

Goods exported with payment of IGST generally get the IGST refund through the shipping bill system, which is treated as the refund application, rather than through RFD-01.

When is ITC refund not allowed?

Section 54(3) restricts refund of unutilised ITC to zero-rated supplies made without payment of tax and inverted duty cases. It is not allowed:

• Where outward supplies are nil-rated or fully exempt
• For goods or services the government has notified as excluded from inverted-duty refunds
• Where the supplier has claimed drawback of central tax, or refund of the IGST paid on the same supplies

What is the time limit for a GST refund?

Section 54(1) requires the application to be made before two years from the relevant date. The relevant date depends on the refund type and is defined in the Explanation to Section 54 — for exports it is tied to the export or payment event, and for other claims to events such as the receipt of supplies or the due date of the relevant return. Work out the relevant date for your specific refund type before filing.

Key points from CBIC circulars and the portal:

• The date of the application's ARN is treated as the filing date.
• A fresh application filed after a deficiency memo must still be within two years of the relevant date.
• The portal does not check limitation; the responsibility is yours.

What documents do you need?

Prepare these before you start:

1. Invoices for the period of the claim (outward and inward, as relevant).
2. Statement of invoices in the prescribed annexure format.
3. For exports of goods: shipping bills and export general manifest details.
4. For exports of services: invoices and Bank Realisation Certificates or Foreign Inward Remittance Certificates.
5. For SEZ supplies: endorsement from the SEZ officer.
6. Letter of Undertaking (LUT) acknowledgement for zero-rated supplies without tax.
7. Undertaking or declaration regarding unjust enrichment, where required.
8. Calculation of refund amount under Rule 89 (for ITC refunds).
9. Bank account details validated on the portal.

For how export invoices under LUT should look, see export invoice under LUT.

How do I file a GST refund application step by step?

1. Log in to gst.gov.in and go to Services > Refunds > Application for Refund.
2. Select the refund type (for example "Export of Services with payment of tax" or "Refund of ITC on Export of Goods & Services without Payment of Tax").
3. Choose the tax period or period range and click Create.
4. Fill the statement of invoices or upload it in the offline utility format.
5. Enter the refund amount calculation; for ITC refunds the portal shows the Rule 89 formula fields (net ITC, turnover of zero-rated or inverted supplies, adjusted total turnover).
6. Upload supporting documents (each file has a size limit on the portal).
7. Select the bank account for credit.
8. Preview, sign the declaration and file with DSC or EVC.
9. The portal debits the claimed ITC from your credit ledger (for ITC refunds) and generates an ARN.
10. Track the status under Services > Refunds > Track Application Status.

What happens after you file?

Stage	What happens
Acknowledgement	The officer scrutinises the claim for completeness and issues an acknowledgement or a deficiency memo
Deficiency memo	You fix the issues and file a fresh application; the debited ITC is re-credited
Provisional refund	For zero-rated supplies, Section 54(6) provides for a provisional refund of 90% of the claim, subject to conditions
Show cause notice	If the officer proposes to reject any part, you get a notice and a chance to reply
Refund order	The officer issues a sanction or rejection order
Payment	The sanctioned amount is credited to your validated bank account

If the refund is not paid within the time set by Section 56, interest is payable to you on the delayed refund.

Worked example: a Pune software exporter's ITC refund

A Pune software services firm exports services under LUT and also has some domestic sales. For the July–September 2026 quarter:

Figure	Amount
Turnover of zero-rated supply of services (export, under LUT)	₹60,00,000
Domestic taxable turnover	₹20,00,000
Adjusted total turnover	₹80,00,000
Net ITC for the quarter (eligible, after excluding blocked credits)	₹6,40,000

Rule 89(4) formula for exports without payment of tax:

Refund = (Turnover of zero-rated supply × Net ITC) ÷ Adjusted total turnover

= (₹60,00,000 × ₹6,40,000) ÷ ₹80,00,000 = ₹4,80,000

The balance ITC of ₹1,60,000 relates to domestic sales and stays in the credit ledger to pay GST on those sales. Before filing, the firm checks that all export invoices have matching foreign remittance proof, that blocked items (staff meals, for example) are excluded from net ITC, and that the claim is filed within two years of the relevant date. See blocked input tax credit for what to exclude.

How do you avoid refund delays?

• Reconcile first. Your GSTR-1, GSTR-3B and GSTR-2B should support the turnover and ITC in the claim. See GSTR-2B reconciliation.
• Use the right refund type. Choosing the wrong category means a deficiency memo.
• Validate your bank account on the portal before applying.
• Keep remittance proof ready for exports of services.
• File within the limit with margin, since a deficiency memo restarts the application.
• Keep the LUT current for each financial year if you export without tax.

What is the Rule 89(5) formula for inverted duty refunds?

Inverted duty refunds use a different formula from exports. Rule 89(5) of the CGST Rules, as it currently stands on the CBIC tax repository, reads:

Maximum Refund Amount = (Turnover of inverted rated supply × Net ITC ÷ Adjusted Total Turnover) − [Tax payable on such inverted rated supply × (Net ITC ÷ ITC availed on inputs and input services)]

Here Net ITC means ITC availed on inputs (goods) during the period — ITC on input services and capital goods is left out of Net ITC, though input services still appear in the denominator of the second bracket. Adjusted Total Turnover is broadly your total turnover in the state for the period, excluding exempt supplies other than zero-rated ones. The formula has been amended over time, so use the version applicable to your claim period, and keep the calculation sheet with your application.

Worked example of the Rule 89(5) formula

A Nashik fabric processor reports these figures for a quarter (all in one state):

Item	Amount
Turnover of inverted rated supply (output taxed at 5%)	₹40,00,000
Adjusted total turnover	₹40,00,000
Tax payable on that supply (5%)	₹2,00,000
ITC on inputs (Net ITC)	₹3,60,000
ITC on input services	₹40,000
ITC availed on inputs and input services	₹4,00,000

1. First part: ₹40,00,000 × ₹3,60,000 ÷ ₹40,00,000 = ₹3,60,000.
2. Second part: ₹2,00,000 × (₹3,60,000 ÷ ₹4,00,000) = ₹2,00,000 × 0.9 = ₹1,80,000.
3. Maximum refund = ₹3,60,000 − ₹1,80,000 = ₹1,80,000.

The refund is also limited to the balance actually available in the electronic credit ledger at the end of the period and at the time of filing, so if the ledger shows less than ₹1,80,000, the claim is restricted to that lower figure. Debiting the claimed amount from the credit ledger happens when you file RFD-01.

A typical case is a manufacturer whose raw materials attract a higher GST rate than the finished product. Since the GST 2.0 rate changes from 22 September 2025 consolidated most goods into 5% and 18% slabs, some businesses that previously had no inversion now do (and vice versa), so it is worth reviewing your input and output rates for periods after that date.

How do you check the status of a refund?

1. Log in and go to Services > Refunds > Track Application Status.
2. Select the refund type and enter the ARN or choose the filing period.
3. Review the status: filed, acknowledged, deficiency memo issued, provisional refund sanctioned, refund order issued, or payment credited.
4. Download any memo, notice or order and respond within the time it allows.
5. If a deficiency memo is issued, check that the ITC debited for the claim has been re-credited to your ledger before you refile.

Can you withdraw a refund application?

The portal allows withdrawal of a refund application at the stage before it is acknowledged or a deficiency memo is issued, and any ITC debited is re-credited. Withdrawal is useful when you realise you chose the wrong refund type or period; refile promptly so the two-year clock does not run out.

Common mistakes

• Including blocked or ineligible ITC in net ITC for the Rule 89 calculation.
• Claiming ITC refund on exempt supplies, which Section 54(3) does not allow.
• Missing the two-year limit because the portal accepted the application anyway.
• Claiming both drawback and ITC refund on the same supply.
• Mismatch between shipping bills and GSTR-1 export details, which stops the automated IGST refund for goods.
• Uploading unreadable or incomplete documents.

Key takeaways

• Refunds are claimed online through RFD-01 within two years of the relevant date.
• ITC refunds are allowed only for zero-rated supplies without tax and inverted duty structures.
• Exports of goods with IGST paid are refunded through the shipping bill route.
• Zero-rated claims can get a 90% provisional refund under Section 54(6).
• Reconcile returns and documents before filing to avoid deficiency memos.

Billing Software by Betterwork supports export invoices in foreign currency and GSTR exports, which keeps the invoice-level data in your refund statement consistent with your returns. For filing the returns that underpin a refund, see the GSTR-1 filing guide.

This guide is general information, not tax advice. Rules last checked on 20 October 2026; confirm with your tax professional for your situation.