Under GST, there can be various scenarios where a taxpayer is entitled to a refund of tax, interest, penalty, fees, or other amounts. Rule 89 of the CGST Rules, 2017 lays down the procedure, documentation, eligibility, and conditions for claiming such refunds.
Refund can be claimed under Section 54 of the CGST Act, and Rule 89 prescribes how this refund is to be applied for and processed. It aims to reduce working capital blockages and ensure liquidity for businesses, especially exporters and manufacturers.
Legal Reference
- Section: 54 of the CGST Act, 2017 (Refunds)
- Rule: 89 of the CGST Rules, 2017
- Relevant Forms: GST RFD-01, RFD-03, RFD-06
Rule 89(1): Filing of Refund Application
🔹 Provision:
Any person claiming a refund may apply electronically through the GST portal in FORM GST RFD-01, along with supporting documents.
🔹 Who can apply?
- Registered taxpayers
- Unregistered persons (in cases of excess tax paid)
- SEZ units/developers
- Exporters (of goods/services)
- UN agencies and embassies
🔹 Refund may be claimed for:
- Excess balance in electronic cash ledger
- Tax paid on zero-rated supplies (exports, SEZ)
- Inverted duty structure (higher tax on inputs than output)
- Tax paid on supply not made
- Tax paid under wrong classification (e.g., intra vs. inter-State)
- Finalization of provisional assessment
Rule 89(1A): Retail Outlets at International Airports
Retail outlets established in the departure area of international airports, supplying indigenous goods to outgoing international tourists, can claim refund of tax paid on inward supplies.
This promotes duty-free shopping and boosts tourism-linked sales.
Rule 89(1B): E-Commerce Operators – Refund of Excess TCS
E-commerce operators who have:
- Collected TCS under Section 52, and
- Paid excess tax inadvertently
Can file a refund application through FORM GST RFD-01.
4. Rule 89(2): Documents to Be Filed Along with Refund Application
| Nature of Refund | Supporting Documents |
| Export of goods | Shipping bill, invoice, EGM |
| Export of services | Invoice, BRC/FIRC, payment proof |
| Supply to SEZ | Endorsement from SEZ officer, invoices |
| Deemed exports | Certificate from recipient, tax payment proof |
| Excess tax paid | Proof of excess payment, tax challans |
| Unutilized ITC | GSTR-2B, GSTR-3B, purchase invoices |
| Others | CA certificate (if amount > ₹2 lakh), declaration of no unjust enrichment |
Note :- Depending on the nature of refund claim, various documents are required:
Refund of Unutilized ITC for Zero-Rated Supplies (Exports Without Payment of Tax)
🔹 Refund Formula:
Refund Amount=
(Turnover of zero-rated supply×Net ITC) /(Adjusted Total Turnover)
Â
Turnover of zero-rated supply: Value of exports (without tax)
- Net ITC: Input Tax Credit on inputs and input services
- Adjusted Turnover: Total turnover in India, excluding exempt/non-GST supplies
✅ Conditions:
- Refund only for input and input services
- Refund not available for capital goods
- Export should be under LUT/Bond
Refund of Unutilized ITC for Zero-Rated Supplies (Exports Without Payment of Tax)
🔹 Refund Formula:
Refund Amount=
(Turnover of zero-rated supply × Net ITC) /(Adjusted Total Turnover) −Tax payable on such supply
Â
- Turnover of zero-rated supply: Value of exports (without tax)
- Net ITC: Input Tax Credit on inputs and input services
- Adjusted Turnover: Total turnover in India, excluding exempt/non-GST supplies
✅ Conditions:
- Refund only for input and input services
- Refund not available for capital goods
- Export should be under LUT/Bond
Cases Where Refund is Not Admissible
- Wrongly availed but not reversed ITC
- Non-filing of relevant GSTR-1, GSTR-3B returns
- Mismatch in export data and ICEGATE
- Refund application filed after 2 years from relevant date
ITC blocked under Section 17(5)