GST refunds directly impact working capital. For exporters, SEZ suppliers, and businesses with inverted duty structure, refunds can be routine, but the process often becomes time consuming due to documentation gaps, portal mismatches, and reconciliation issues.
A strong refund process combines accurate return filing, clean invoice data, reconciled ITC, and a complete documentation pack. This improves the probability of quick sanction and reduces deficiency memos and rejections.
Common Types of GST Refunds
Export of goods or services without payment of tax under LUT
Businesses exporting under LUT can claim refund of unutilised ITC accumulated on inputs and input services.
Key points to track:
- LUT validity and timely filing
- Correct reporting of zero rated supplies in returns
- Reconciliation of export invoices with shipping bills and BRC where applicable
Export of goods or services with payment of IGST
Where IGST is paid on exports, refund is generally processed based on shipping bill and return data.
Key points to track:
- Shipping bill and invoice data matching
- Correct IGST payment reporting
- ICEGATE and GST portal data consistency
Inverted duty structure refund
Inverted duty structure arises when output tax rate is lower than input tax rate leading to accumulation of ITC.
Key points to track:
- Product wise eligibility and exclusions
- Accurate computation of net ITC and turnover
- Correct classification and rate positions
Excess balance in electronic cash ledger
Refund can be claimed for excess cash deposited in the electronic cash ledger.
Key points to track:
- Bank account validation on portal
- Correct selection of refund category
- Use of PMT 09 where cash needs to be reallocated before refund
Other refund scenarios
Depending on facts, refunds may also arise from:
- Excess tax payment
- Supplies to SEZ
- Deemed exports
- Refund on cancellation of registration
Eligibility and Key Preconditions
Refund success depends on strong baseline compliance:
- Returns filed on time and consistent across GSTR 1 and GSTR 3B
- Clean invoice data and correct GSTIN and place of supply
- ITC eligibility checks and blocked credit removal
- Reconciliation with GSTR 2B and vendor compliance
Practical tip: Many refund queries are triggered by mismatches between GSTR 1, GSTR 3B, and shipping bill data.
Documentation Pack for GST Refunds
A complete documentation pack typically includes:
- Statement of invoices and supporting working
- GSTR 1 and GSTR 3B copies for the period
- Electronic credit ledger and cash ledger extracts
- Shipping bills and export general manifest where relevant
- BRC or FIRC for export of services where applicable
- LUT acknowledgement
- Declarations and undertakings as prescribed
- CA certificate where required
Maintain a single folder per refund application with version control.
Filing Process Practical Flow
A practical filing flow:
1 Select correct refund category and period 2 Prepare statement and reconcile turnover and tax 3 Validate bank account and authorised signatory 4 File RFD 01 with complete attachments 5 Track ARN and respond to deficiency memo if issued 6 Attend hearing if required and submit clarifications 7 Track RFD 06 order and RFD 05 payment status
Common Errors That Lead to Deficiency Memo or Rejection
- Wrong refund category selection
- Turnover mismatch between statements and returns
- Unreconciled ITC with GSTR 2B
- Missing shipping bill details or ICEGATE mismatch
- Missing BRC or FIRC for export of services
- Incorrect computation for inverted duty structure
- Bank account not validated or mismatch in account details
- Missing declarations or incorrect annexures
Practical GST Refund Checklist
Before filing the refund
1 Ensure all returns for the period are filed 2 Reconcile GSTR 1 and GSTR 3B and export data 3 Reconcile ITC with GSTR 2B and remove ineligible credits 4 Prepare refund computation working and supporting schedules 5 Validate bank account and authorised signatory on portal
While filing
1 Select correct category and period 2 Upload complete statements and supporting documents 3 Review declarations and undertakings 4 Submit and download ARN acknowledgement
After filing
1 Track deficiency memo and respond quickly with corrected filing 2 Maintain a query response file with submissions and acknowledgements 3 Track order and payment status and follow up if delayed 4 Maintain refund register for cash flow tracking
How Perfect Accounting Can Help
Perfect Accounting and Shared Services supports GST refund management end to end:
- Refund eligibility review and planning
- Return and reconciliation clean up before filing
- Documentation pack preparation and filing support
- Reply drafting for deficiency memo and notices
- Refund tracking and cash flow reporting