GST Refunds: When You’re Owed Money and How to Claim It

The main refund situations

• Exports (goods or services) — refund of input credit under LUT, or of IGST paid
• Inverted duty structure — inputs taxed higher than outputs, accumulating credit
• Excess balance in the electronic cash ledger
• Refund of tax paid on supplies to SEZ units/developers
• Certain other cases — excess payment, finalisation of provisional assessment, etc.

Inverted duty — the one businesses miss

The inverted duty structure is where your inputs carry a higher GST rate than your finished product — common in textiles (man-made yarn vs fabric), footwear, fertilisers and more. The extra input credit accumulates and can’t be fully used against your lower output tax. That accumulated credit is refundable, and for a manufacturer it can be substantial — yet it’s often left unclaimed.

How the process works

A refund is claimed in form RFD-01 with supporting statements and documents, within the time limit (generally two years from the relevant date). The application is examined, and an eligible refund is sanctioned, sometimes provisionally for exports. Clean documentation — matching invoices, shipping/LUT proof, reconciliations — is what separates a smooth sanction from a deficiency memo.

Why claims get delayed or rejected

• Missing the two-year time limit from the relevant date
• Mismatch between the claim, GSTR-1 and GSTR-3B
• Incomplete export/LUT or SEZ documentation
• Wrong refund category selected
• Input credit not actually reflected/eligible