Under the Goods and Services Tax (GST) regime, businesses can claim refunds for taxes and Input Tax Credit (ITC) under specific circumstances. the applicant must file form RFD-01, with the supporting documents, within the time limit given under the Section 54 of the CGST Act read with Rule 89 of the CGST Rules.
This article details all about refund of the unutilised ITC, including, eligibility criteria, refund process, time limit, calculation of maximum reufund, declarations to be given, cases for provisional refund etc.
Latest Update
28th August 2025
GSTN has issued advisory to clarify system changes for allowing refunds on account of assessment/enforcement/appeal/revision/any other order (ASSORD). Changes are as follows-
- Claim refunds irrespective of the Demand ID status, but only where demand amount is negative.
- Such persons can claim refunds where the minor head can have a negative balance even if the cumulative balance is positive or zero.
- Negative balance auto-populates into RFD-01 refund application.
- GST portal automatically suggests the most recent demand order related to a negative balance, being order-in-original, rectification order or appellate order, etc.
The taxpayers can claim the refund of accumulated ITC in the following situations:
Cases, where refund of unutilised ITC is not allowed, is as follows:
As per Section 54 of the CGST Act, any person claiming the refund of GST or the interest paid should make an application in form RFD-01 within two years from the relevant date for most types of refunds. The “relevant date” given here varies with the type of refund claimed, explained in our article “Important definitions in GST refund”.
In case of unutilised ITC on account of exports or supplies to SEZ (zero-rated supplies), the applicant can file RFD-01 at the end of any tax period.
In case of refund claims by the embassies or international organisations, the application must be filed for the refund before the expiry of six months from the last day of the quarter in which such goods/service were received. The form used is RFD-10 in such cases after the furnishing of GSTR-11 return.
(1) Refund of accumulated ITC on account of zero-rated supplies without tax payment (exports and supplies to SEZ units or developers)
The formula for calculating eligible refund amount is as follows:
Amount of Refund = [ Net ITC x (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) ] ÷ Adjusted Total Turnover
(2) Refund of accumulated ITC on account of inverted tax structure
The formula for calculating eligible refund amount is as follows:
Amount of Refund = {[ Net ITC x (Turnover of inverted rated supply of goods and services)] ÷ Adjusted Total Turnover} – Tax liability on inverted rated supply of goods and services
The terms used in the formulae are defined as follows:
Net ITC, turnovers at both (1) and (2) exclude the ITC or sales turnover of supplies, as the case may be, taken under the benefit of the CGST Rules 89(4A) and 89(4B):
The steps are briefly explained as given below:
The refund of these types can be claimed by filing RFD-01 on the GST portal for the particular period. In addition, one can file a refund for multiple tax periods in one application across the financial years.
For detailed steps, check out our article “GST refund Process”.
There are certain points to note while filing a refund application for accumulated ITC:
Declaration to be given for all types of refund related to unutilised ITC claims
Declaration with respect to refund on account of supplies to SEZ units and SEZ developers
Annexure-1
Refund on account of inverted tax structure (Statement 1 and statement 1A):
Statement 1
Turnover of inverted rated supply of goods and services | Tax payable on such inverted rated supply of goods and services | Adjusted total turnover | Net input tax credit | Maximum refund amount to be claimed [(1×4÷3)-2] |
1 | 2 | 3 | 4 | 5 |
Statement 1A
Sl. no. | Details of documents of inward supplies received on inputs received | Tax paid on inward supplies | Details of documents of outward supplies issued | Tax paid on outward supplies | ||||||||||||||
Type of inward supplies | GSTIN of Supplies/Self GSTIN | Type of document | No./B/E | Port code | Date | Taxable value | Integrated tax | Central tax | State/UT tax | Type of Outward Supply | Type of Document | No. | Date | Taxable value | Integrated tax | Central tax | State/UT tax | |
1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 |
B2B/B2C |
Refund of unutilised ITC on account of export of goods or services without tax payment (Statement 3 and statement 3A):
Statement 3
Sl.no. | Documents Details | Goods/ Services (G/ S) | Shipping bill/ Bill of export | EGM Details | BRC/FIRC | ||||||||
Type of Document | No. | Date | Value | Port code | No. | Date | Ref. no. | Date | No. | Date | Value | ||
1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 |
Statement 3A
Turnover of zero-rated supply of goods and services | Net input tax credit | Adjusted total turnover | Refund amount (1×2÷3) |
1 | 2 | 3 | 4 |
Refund of unutilised ITC on account of supplies made to SEZ unit or SEZ developer without tax payment (Statement 5 and statement 5A):
Statement 5
Sl. no. | Document Details | Goods/Services (G/S) | Shipping bill/Bill of export/Endorsed invoice no. | ||||
Type of Document | No. | Date | Value | ||||
1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
Statement 5A
Turnover of zero-rated supply of goods and services | Net input tax credit | Adjusted total turnover | Refund amount (1×2÷3) |
1 | 2 | 3 | 4 |
Annexure 2 is not applicable to be submitted for claiming the refund of unutilised ITC by any taxpayer.
Section 54(6) read with CGST Rule 91 deals with the grant of provisional refund. In the following cases about a refund of unutilised ITC, a refund can be granted on a provisional basis in form RFD-04 to the extent of 90% of the claims made:
The provisional refund granted shall exclude ITC that is provisionally accepted (for instance, on the CGST Rule 36(4)). The order for provisional refund is issued within seven days from the date of issuing acknowledgement in RFD-02. This may not be revalidated by the GST refund processing officer while verifying the application for final settlement and order in RFD-06.
Suppose the refund amount claimed by the applicant is relatable to the following types, including unutilised ITC. In that case, it can be paid to the applicant directly rather than crediting it to the Consumer Welfare Fund: