GST Refund Process in 2026: RFD-01 Categories, Time Limits, Inverted Duty and Export Refunds

GST refunds are money the government owes you — but nobody sends it unless you claim it, in the right category, with the right statements, inside the time limit. For exporters and manufacturers whose input tax is higher than their output tax, refunds are working capital, and a rejected claim can hold up lakhs for months. This guide is for business owners, exporters and accountants. It covers every RFD-01 category, the two-year limit, the inverted duty formula under Rule 89(5), export refunds, the 90% provisional refund, deficiency memos and what changes after the 57th GST Council, with worked ₹ examples. Checked against the CGST Act, CGST Rules and CBIC circulars in October 2026.

Quick answer

To claim a GST refund, file Form RFD-01 on the GST portal under the right category within two years from the relevant date, with the statements the category requires. The officer acknowledges it (RFD-02) or issues a deficiency memo (RFD-03) within 15 days of filing, and must pass the final order (RFD-06) within 60 days of a complete application. Export-of-goods IGST refunds skip RFD-01: the shipping bill is the claim.

• Zero-rated claims: 90% provisional refund within seven days from the acknowledgement if the system rates them low-risk

• Inverted duty: refund of ITC on inputs only, by the Rule 89(5) formula

• No refund below ₹1,000; interest at 6% a year if paid after 60 days

• Excess cash-ledger balance can be claimed any time — no two-year limit

When can you claim a GST refund?

Section 54 of the CGST Act allows a refund of tax, interest or any other amount you paid, and of unutilised input tax credit — but the second only in two cases: zero-rated supplies made without paying tax (exports and SEZ supplies under an LUT or bond), and inverted duty structure, where the tax rate on your inputs is higher than on your output. Accumulated credit for any other reason, such as slow sales or a large purchase of capital goods, can't be refunded; it stays in your ledger for future use.

The GST portal lists these refund types in the RFD-01 drop-down:

Who can't get one. A refund isn't paid if the amount is below ₹1,000 (section 54(14)). No ITC refund is allowed on goods subject to export duty (section 54(15)), or where you also claim drawback of central tax or an IGST refund on the same export. Refunds are withheld while your registration is suspended, and anyone who hasn't completed Aadhaar authentication under Rule 10B can't file an RFD-01.

The two-year time limit and relevant dates

Most refunds must be filed within two years from the relevant date. Getting the relevant date right is the whole game:

• Goods exported by sea or air: the date the ship or aircraft leaves India; by land, the date the goods cross the frontier; by post, the date of despatch.
• Services exported: the date payment is received in foreign exchange (or rupees where RBI permits), or the invoice date if you were paid in advance.
• Inverted duty: the due date for filing GSTR-3B for the period in which the claim arises — so for a July–September claim, the October GSTR-3B due date.
• Supplies to SEZ: the due date of the return for those supplies.
• Refund arising from an order: the date the order is communicated.
• Anything else: the date you paid the tax.

Two things stop the clock. Under the proviso to Rule 90(3), if the officer issues a deficiency memo, the time from your first filing to the memo is excluded from the two years when you refile. And under Circular 166/22/2021-GST, the two-year limit doesn't apply to a refund of excess balance in the electronic cash ledger at all — you can claim it whenever you like, without an unjust-enrichment certificate.

Step-by-step: the GST refund process

From RFD-01 to money in your bank

1. 1

   Check eligibility and the bank account

   Confirm the category, the relevant date and that your returns for the period (GSTR-1 and GSTR-3B) are filed. Make sure the bank account on your registration is validated — refunds are paid only to it.

2. 2

   File RFD-01 on the portal

   Services → Refunds → Application for Refund. Pick the category and period, fill the statement for that category (for example Statement 1A for inverted duty, Statement 3 for exports under LUT), upload invoices and supporting documents, and sign with DSC or EVC.

   Tip: For ITC refunds, the claimed amount is debited from your credit ledger when you file. If the claim is withdrawn or reduced, it's re-credited.

3. 3

   Acknowledgement or deficiency memo

   Within 15 days the officer issues RFD-02 (complete) or RFD-03 (deficient). Cash-ledger claims get RFD-02 automatically. On RFD-03, fix the gap and file a fresh RFD-01.

4. 4

   Provisional refund for zero-rated claims

   If the system rates the claim low-risk, 90% is sanctioned provisionally in RFD-04 within seven days of acknowledgement; payment follows in RFD-05.

5. 5

   Scrutiny and show cause, if any

   If the officer thinks part of the claim is inadmissible, he issues RFD-08. Reply in RFD-09 within 15 days, with documents, and ask for a hearing.

6. 6

   Final order and payment

   The officer passes RFD-06 within 60 days of a complete application, sanctioning, reducing or rejecting the claim, and RFD-05 releases the money. Interest at 6% runs on refunds paid late.

You can track a claim under Services → Refunds → Track Application Status. If you change your mind before any order is issued, file RFD-01W to withdraw the application; amounts debited from your ledger are credited back.

What makes claims go smoothly. Officers see the same problems again and again: turnover figures in the statement that don't match GSTR-1 and GSTR-3B, invoices in the statement missing from GSTR-2B, export invoices without shipping-bill or FIRC details, and ITC refunds claimed for a period when the credit ledger didn't have the balance. Reconcile before filing — the portal checks some of these, but an officer checks all of them.

The simplest refund: excess cash in the ledger. If you deposited a challan twice, or TDS and TCS credits have built up in your electronic cash ledger, you can claim the balance under "excess balance in electronic cash ledger". There are no statements or invoices to upload, no time limit and no unjust-enrichment certificate; the portal issues the acknowledgement immediately and the debit from your cash ledger is shown on filing. The only catches are the ₹1,000 minimum and that the officer can still adjust the refund against any confirmed dues you haven't paid. Many small businesses leave a few thousand rupees in the cash ledger for years without realising it can be claimed.

Inverted duty refund: the Rule 89(5) formula

You have an inverted duty structure when credit builds up because your inputs are taxed at a higher rate than your output (other than nil-rated or fully exempt output). GST 2.0, from 22 September 2025, removed some inversions by cutting rates on inputs such as fertiliser acids and man-made fibre, and created others by cutting rates on finished goods to 5% while packaging, chemicals and services stayed at 18%. See our GST 2.0 guide for the rate changes.

Since July 2022 (Notification 14/2022-CT), the formula is:

Maximum refund = (Turnover of inverted rated supply × Net ITC ÷ Adjusted total turnover) − (Tax payable on the inverted rated supply × Net ITC ÷ ITC availed on inputs and input services)

• Net ITC is ITC on inputs only — goods used in making your supplies. Credit on input services and capital goods is left out.
• Adjusted total turnover is your turnover in the state for the period (including zero-rated supplies of services), excluding exempt supplies other than zero-rated supplies.
• The second part of the formula takes out only the share of output tax that was paid using input credit, rather than all of it — the reason for the 2022 change.

Who can't claim. Section 54(3)(ii) lets the government notify goods and services for which no inverted-duty refund is allowed. Notification 5/2017-CT(Rate), as amended, lists such goods — including certain oils, coal and lignite since July 2022. Check the current list on the CBIC site before relying on a refund. And unlike zero-rated claims, inverted-duty claims don't get a 90% provisional refund yet: the Finance Act 2026 extended section 54(6) to them, but that change was still "yet to be notified" in October 2026.

Worked example: an agarbatti maker's inverted duty refund

Shree Sugandh Products in Bengaluru makes incense sticks, taxed at 5%. Its main inputs — essential oils and fragrance compounds at 18%, plastic packaging at 18% — carry higher rates, while bamboo sticks are at 5%. For July–September 2026 its figures are:

Applying Rule 89(5):

• First part: ₹60,00,000 × ₹4,44,000 ÷ ₹60,00,000 = ₹4,44,000
• Second part: ₹3,00,000 × (₹4,44,000 ÷ ₹4,80,000) = ₹3,00,000 × 0.925 = ₹2,77,500
• Maximum refund = ₹4,44,000 − ₹2,77,500 = ₹1,66,500

Ledger check. Total ITC ₹4,80,000 less output tax ₹3,00,000 leaves ₹1,80,000 in the credit ledger. The refund of ₹1,66,500 is below that, so the full amount can be claimed. The ₹13,500 that remains is the input-services share of the accumulated credit — exactly what the current formula excludes.

Timing. The relevant date for an inverted-duty claim is the GSTR-3B due date for the period in which it arises. To be safe with a quarterly claim, count from the earliest month: July's return was due on 20 August 2026, so file by 20 August 2028. Shree Sugandh files RFD-01 under "inverted tax structure" with Statement 1A in October. With no provisional route, it should expect RFD-02 within 15 days of filing and RFD-06 within 60 days of a complete application. If the money arrives on day 75, it's owed interest at 6% a year for 15 days.

What changes if the 57th Council's plan is notified. The Council recommended refunds of input-service credit in inverted-duty cases for ITC availed on or after 1 November 2026. If the law follows, the ₹13,500 type of balance would become refundable for later periods.

Export refunds: LUT, IGST-paid and SEZ

Exports and SEZ supplies are zero-rated: you can make them without paying tax and recover the input tax, or pay IGST and get that back. Which refund you claim depends on the route.

Exports under LUT (no IGST charged). Most exporters file a Letter of Undertaking in RFD-11 at the start of each year, export without IGST, and claim the credit that piles up through RFD-01 under "export without payment of tax". The amount comes from the Rule 89(4) formula: zero-rated turnover × Net ITC ÷ adjusted total turnover. Here Net ITC includes input services (unlike inverted duty), but not capital goods. The value of goods exported is the lower of the invoice value and the shipping bill FOB value, and is currently capped at 1.5 times the value of like goods sold domestically — a cap the 57th GST Council recommended removing.

Three ways exporters get GST back

	Export under LUT	Goods exported on IGST	Services exported on IGST
Tax on the export invoice	None	IGST charged and paid	IGST charged and paid
What is refunded	Unutilised ITC (Rule 89(4))	The IGST paid	The IGST paid
How to claim	RFD-01	Shipping bill (Rule 96) — no RFD-01	RFD-01
Who processes it	GST officer	Customs via ICEGATE	GST officer
Provisional 90%	Yes, if low-risk	Not needed	Yes, if low-risk

Tax on the export invoice

Export under LUT

None

Goods exported on IGST

IGST charged and paid

Services exported on IGST

IGST charged and paid

What is refunded

Export under LUT

Unutilised ITC (Rule 89(4))

Goods exported on IGST

The IGST paid

Services exported on IGST

The IGST paid

How to claim

Export under LUT

RFD-01

Goods exported on IGST

Shipping bill (Rule 96) — no RFD-01

Services exported on IGST

RFD-01

Who processes it

Export under LUT

GST officer

Goods exported on IGST

Customs via ICEGATE

Services exported on IGST

GST officer

Provisional 90%

Export under LUT

Yes, if low-risk

Goods exported on IGST

Not needed

Services exported on IGST

Yes, if low-risk

Goods exported on payment of IGST. No RFD-01 is needed. Under Rule 96, the shipping bill is the refund application. Once the export general manifest is filed, your GSTR-1 Table 6A matches the shipping bill, and GSTR-3B is filed, customs (ICEGATE) credits the IGST to your bank account. Most delays come from mismatches in invoice number, GSTIN, port code or value between the shipping bill and GSTR-1.

Services exported on payment of IGST. Claimed through RFD-01, with invoices and bank realisation certificates or FIRCs.

SEZ supplies. The supplier claims the refund after the goods are admitted into the SEZ for authorised operations (endorsed by the specified officer) or, for services, with proof of the SEZ unit's endorsement and payment.

Provisional refunds since 1 October 2025. Section 54(6) allows 90% of a zero-rated claim to be paid provisionally. Notification 13/2025-CT rewrote Rule 91(2) so the order now comes within seven days from the acknowledgement, based on the system's risk rating. Notification 14/2025-CT keeps two groups out: anyone who hasn't completed Aadhaar authentication, and suppliers of areca nuts, pan masala, tobacco and essential oils. The rest of the claim follows with the final order.

Common reasons refunds are rejected — and fixes

Wrong category. A refund of IGST paid on a domestic invoice that should have been CGST and SGST is a section 77 claim, not "excess payment". Choosing the wrong one gets a deficiency memo.

Before you file RFD-01

0/8

• Right category chosen, and the period's GSTR-1 and GSTR-3B filed
• Relevant date checked — still inside two years
• Statement turnover matches GSTR-1 and GSTR-3B
• Every invoice in the claim appears in GSTR-2B
• Credit ledger holds at least the amount claimed
• Shipping bills, BRCs or FIRCs ready for export claims
• CA certificate on unjust enrichment if the claim exceeds ₹2 lakh (where required)
• Bank account validated and Aadhaar authentication done

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Turnover mismatch. The turnover in your RFD-01 statement must match what you reported in GSTR-1 and GSTR-3B for the period. Correct your returns first, or explain the difference in the application.

ITC not in GSTR-2B. Officers allow refunds only on credit that was validly claimed — which since 2022 means invoices in your GSTR-2B. Invoices missing from it are cut from the refund.

Unjust enrichment. Where you refund tax you collected from customers (for example, excess tax charged), you must show it wasn't passed on, with a CA certificate above ₹2 lakh. This doesn't apply to export refunds or excess cash-ledger balances.

Insufficient ledger balance. For ITC refunds, the claimed amount must be in your credit ledger on the day you file. If you used the credit to pay tax before filing, the claim shrinks.

If an officer issues RFD-08, reply in RFD-09 within 15 days with a reconciliation and documents, and ask for a hearing. An RFD-06 rejection can be appealed in APL-01 within three months; see our guide to GST notices and appeals.

What the 57th GST Council proposed for refunds

Refund changes: in force and proposed

Jul 2022

Rule 89(5) formula revised (Notification 14/2022-CT)

1 Oct 2025

Risk-based 90% provisional refund within seven days for zero-rated claims

30 Mar 2026

Finance Act 2026 amends section 54 — provisional refunds for inverted duty, ₹1,000 floor removed for goods exported on payment of tax (not yet notified)

8 Oct 2026

57th GST Council recommends system-based refunds, 10-day acknowledgement and input-service refunds

1 Nov 2026 (proposed)

Input-service ITC from this date eligible for inverted-duty refunds, once notified

1 Apr 2027 (proposed)

Capital-goods ITC from this date refundable over 60 months, once notified

The 57th GST Council (8 October 2026) recommended a two-phase move to system-based refunds:

• Phase 1: excess cash-ledger refunds sanctioned automatically; the time to acknowledge or issue a deficiency memo cut from 15 to 10 days, with deemed acknowledgement if the officer doesn't act; and 90% of zero-rated and inverted-duty claims sanctioned provisionally by the system on risk evaluation.
• Phase 2: system acknowledgement and automated sanction of the full refund for zero-rated claims, after adjusting pending dues.

It also recommended a system-readable RFD-01 with no scanned uploads for zero-rated and inverted-duty claims, removing the 1.5× cap on export turnover in Rule 89(4), clarifying that the ₹1,000 floor applies to CGST, SGST and IGST together, refunds of accumulated credit on capital goods for zero-rated and inverted-duty claims and on input services for inverted-duty claims, and treating services to a foreign branch of the same company as exports.

None of this applies until the CGST Act and Rules are amended and notified. File under the current rules, and re-check the CBIC notifications page before your next claim.

Official links

• GST portal — RefundsServices > Refunds > Application for Refund / Track Status
• Section 54, CGST ActTime limit, relevant dates, provisional refund
• Rule 89, CGST RulesRFD-01 documents and refund formulas
• Rule 90, CGST RulesAcknowledgement and deficiency memo
• Rule 91, CGST RulesProvisional refund
• 57th GST Council recommendations (PIB)Proposed refund reforms

What to do next

Set a quarterly reminder to file refund claims rather than letting them accumulate — the two-year clock is per period, and small, regular claims are processed faster than one large claim covering two years. If you export, make sure this year's LUT is filed and your export documentation carries matching invoice numbers across the shipping bill and GSTR-1. For the credit side, our input tax credit guide explains what you can and can't claim.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

What is the time limit to claim a GST refund?

Most refunds must be claimed within two years from the relevant date under section 54(1). The relevant date depends on the claim: for goods exported by sea or air it's the date the ship or aircraft leaves India; for exported services it's the date of payment; for inverted duty it's the due date of the return for the period. Refunds of excess cash-ledger balance have no time limit (Circular 166/22/2021-GST).

How long does a GST refund take?

The officer must acknowledge the claim or issue a deficiency memo within 15 days of filing, and pass the final order within 60 days of a complete application. For zero-rated claims rated low-risk, 90% is sanctioned provisionally within seven days from the acknowledgement. If the refund isn't paid within 60 days, interest at 6% a year is due for the delay.

Can I get a refund of GST paid on input services in an inverted duty structure?

Not yet. Rule 89(5) counts only ITC on inputs (goods) as 'Net ITC', so credit on input services and capital goods isn't refunded. The 57th GST Council recommended allowing refunds of input-service credit availed on or after 1 November 2026, and of capital-goods credit availed from 1 April 2027, spread over 60 months. Both need amendments to be notified.

What is a deficiency memo in GST refund?

A deficiency memo in Form RFD-03 tells you the refund application is incomplete — a missing statement, document or declaration. You must file a fresh RFD-01 after fixing it. The time between your first filing and the memo is excluded from the two-year limit, and any amount debited from your ledger is re-credited.

Is there a minimum amount for a GST refund?

Yes. Under section 54(14), no refund is paid if the amount is below ₹1,000. The Finance Act 2026 exempts exports of goods on payment of tax from this floor, but that amendment wasn't notified as of October 2026. The 57th GST Council also recommended clarifying that the threshold applies to CGST, SGST and IGST together.

How do exporters of goods get IGST refunds?

If you export goods on payment of IGST, you don't file RFD-01. The shipping bill is treated as the refund application under Rule 96, and customs pays the IGST once your GSTR-1 export details match the shipping bill and GSTR-3B is filed. Exporters under an LUT instead claim unutilised ITC through RFD-01.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 11 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Section 54 – CGST Act, 2017 (refund of tax) — CBIC · accessed 11 October 2026
2. 2.Rule 89 – CGST Rules, 2017 (application for refund) — CBIC · accessed 11 October 2026
3. 3.Rule 90 – CGST Rules, 2017 (acknowledgement) — CBIC · accessed 11 October 2026
4. 4.Rule 91 – CGST Rules, 2017 (provisional refund) — CBIC · accessed 11 October 2026
5. 5.Rule 92 – CGST Rules, 2017 (order sanctioning refund) — CBIC · accessed 11 October 2026
6. 6.Section 56 – CGST Act, 2017 (interest on delayed refunds) — CBIC · accessed 11 October 2026
7. 7.Circular No. 166/22/2021-GST (refund-related clarifications) — CBIC (hosted by GST Council) · accessed 11 October 2026
8. 8.Notification No. 14/2025 – State Tax (Maharashtra), mirroring 14/2025–Central Tax — Government of Maharashtra · accessed 11 October 2026
9. 9.Recommendations of the 57th Meeting of the GST Council — Press Information Bureau, Ministry of Finance · accessed 11 October 2026
10. 10.Notification No. 5/2017 – Central Tax (Rate) (no refund of inverted duty for notified goods) — TaxHeal (reproducing CBIC notification) · accessed 11 October 2026