A SELF-DIAGNOSIS & RESOLUTION GUIDE FOR GST REFUND DELAYS

Introduction – Overview of GST Refund Challenges – Purpose of This Guide

The Goods and Services Tax (GST) refund process in India, though streamlined in principle, often presents significant practical challenges for businesses. From documentation mismatches and portal errors to procedural delays and officer-level discretion, several hurdles can obstruct timely refunds. These issues are especially critical for exporters and zero rated suppliers, where working capital is tightly linked to refund flows. Understanding the root causes of these challenges is essential for effective compliance and cash flow management.

If you’re wondering why your GST refund is stuck or taking longer than usual, this in-depth guide will help you identify the cause and take corrective action.

GST REFUND LIFECYCLE: STEP-BY-STEP BREAKDOWN

To understand where delays can occur, it’s important to first understand the standard workflow of a GST refund application:

FILING OF REFUND APPLICATION (RFD-01)

Form GST RFD-01 is the official application form used to claim refunds under various scenarios such as export of goods or services, inverted duty structure, excess cash in electronic ledger, and more.

WHERE TO FILE
Filed online on the GST portal: https://www.gst.gov.in
Navigate to: Services → Refunds → Application for Refund

KEY PRE-REQUISITES
All GSTR-1 and GSTR-3B returns must be filed for the relevant period.
Refund should be for a valid category.
Ensure no duplicate filing for the same period and category.

POST-FILING
Once submitted, an Acknowledgement Reference Number (ARN) is generated. Officer has 15 days to issue RFD-02 (Acknowledgement) or RFD-03 (Deficiency Memo).

ACKNOWLEDGMENT OR DEFICIENCY MEMO (RFD-02 / RFD-03)

After you submit your refund application in Form RFD-01, the proper officer reviews it within 15 days and issues one of the following:

RFD-02 – ACKNOWLEDGMENT: Issued if the application is complete in all respects. Confirms that the refund claim is admitted for further processing. Marks the “date of filing” officially, which is used to calculate statutory time limits (e.g., 60-day refund timeline). Enables provisional refund (90%) in certain cases, like export without payment of tax.

RFD-03 – DEFICIENCY MEMO: Issued when the application is incomplete or incorrect, e.g.:

• Mismatch in invoices or tax payments
• Missing documents like FIRCs or incorrect refund category

The original refund application is considered null and void. You must correct the deficiencies and file a fresh RFD-01 with a new ARN.

IMPORTANT NOTES
✓ The 15-day period begins from the date of ARN generation.
✓ If RFD-03 is issued, the earlier application is not treated as filed under Rule 90(3).
✓ The officer cannot issue both RFD-02 and RFD-03 — only one applies based on scrutiny.

PROVISIONAL REFUND (OPTIONAL) – FORM RFD-04

Form RFD-04 is issued when the GST officer grants a provisional refund of 90% of the claimed amount before completing full verification. This facility is designed to ease cash flow for exporters and certain zero-rated suppliers.

WHEN IS PROVISIONAL REFUND APPLICABLE?
The refund claim is for unutilized Input Tax Credit (ITC) on exports without payment of tax (under LUT/Bond).

The taxpayer:

• Has not been prosecuted for tax evasion of over ₹2.5 crore in the preceding five years.
• Has a clean compliance record.
• The refund application (RFD-01) is complete and acknowledged via RFD-02.

LEGAL BASIS
Governed by Rule 91 of the CGST Rules.
Provisional refund is 90% of the claim amount, issued via Form RFD-04.
The officer must issue it within 7 days of the RFD-02 acknowledgment.

WHAT HAPPENS AFTER RFD-04?
Final scrutiny of refund documents continues. Balance 10% (or more if refund was reduced) is sanctioned or rejected via RFD-06 after full verification. Any excess provisionally refunded may be recovered later with interest if found inadmissible.

REFUND ORDER – FORM RFD-06

SCRUTINY BY TAX OFFICER
Final review of supporting documents and tax returns. Below are the typical documents the officer examines before sanctioning the refund:

Document – Purpose

• Export Invoices: To verify details of services exported, tax paid, place of supply (should be outside India), and recipient details.
• Bank Realization Certificates (BRCs) or Foreign Inward Remittance Certificates (FIRCs): To prove receipt of payment in convertible foreign exchange (or INR in permitted cases).
• Copy of GSTR-1 and GSTR-3B: To reconcile tax declared and paid. Export details in Table 6A of GSTR-1 must match GSTR-3B.
• Copy of RFD-01 with ARN: Formal refund application.
• Statement 2 under Rule 89(2)(c) (auto generated or manual): Summary of invoices for export of services with payment of tax.
• Self-declaration / CA Certificate (if refund > ₹2 lakh): Declaration that incidence of tax has not been passed on (Rule 89(2)(l)/(m)).
• Agreement or Contract with Foreign Client: Sometimes requested to validate that service qualifies as “export of service.”
• Email or Correspondence with Client (optional but useful): Can support proof of service delivery, especially for intangible or online services.

When a GST refund claim is rejected (either partially or fully), it triggers a structured set of legal and procedural steps. Here’s what you need to know:

WHAT DOCUMENTS WILL BE ISSUED?

• RFD-06: Refund Sanction Order – specifies the sanctioned and rejected amounts, with reasons.
• RFD-08: Show Cause Notice – issued when any portion is rejected.
• RFD-09: Your Reply to RFD-08 – must be submitted within the specified time (usually 15 days).

WHAT HAPPENS TO THE REJECTED AMOUNT?

IF THE REFUND WAS FOR UNUTILIZED ITC
The rejected amount is NOT refunded. It can be recredited to your Electronic Credit Ledger via Form PMT 03, but only after:

• You don’t plan to appeal and submit an undertaking to that effect.
• You file an appeal and lose or withdraw it and Submit proof of dismissal/withdrawal of the appeal.

IF THE REFUND WAS FOR TAX PAID
Rejected amount is not recredited, since it was a claim for refund of tax already paid. You must appeal under Section 107 of the CGST Act:

• Within 3 months from the date of the RFD-06 order.
• Appeal must be filed in Form GST APL-01 online or manually (as per jurisdiction).

IMPORTANT POINTS:
✓ The rejected amount remains frozen until resolved through one of the above routes.
✓ You cannot re-claim that rejected amount in future refund applications.
✓ If recredit is done via PMT-03, you may use the ITC again, subject to regular eligibility rules.

REFUND PAYMENT ADVICE (RFD-05) AND CREDIT TO BANK

Form RFD-05 is the payment advice generated by the GST officer after your refund is finally sanctioned through Form RFD-06. It acts as the formal instruction to the Public Financial Management System (PFMS) to credit the sanctioned refund amount directly to your bank account.

PURPOSE OF RFD-05

• Serves as a payment order to the RBI-integrated PFMS system.
• Specifies the exact amount to be paid under each tax head (CGST, SGST, IGST, Cess).
• Links the payment to your Application Reference Number (ARN) and bank details provided in your GST registration.

CREDIT TO BANK ACCOUNT
Once RFD-05 is generated, the sanctioned refund is electronically transferred to your bank account, usually within 2–7 working days. You’ll receive an SMS and email alert when the credit is successful. The credited amount reflects as per the breakup mentioned in RFD-05.

COMMON DELAYS & ISSUES

• Bank validation failed
• Delay in PFMS processing
• Refund adjusted against dues

BEST PRACTICES
✓ Keep your bank details updated in the GST registration.
✓ Track refund status regularly using ARN on the GST portal.
✓ In case of delay beyond 7 days after RFD-05, raise a grievance on the GST portal or PFMS helpdesk.

COMMON REASONS FOR GST REFUND DELAYS

Despite defined timelines (typically 60 days from acknowledgment), GST refunds are often delayed due to the following operational, technical, and procedural issues:

MISMATCHED OR INCOMPLETE DATA

One of the most frequent causes of GST refund delays is the presence of mismatched or incomplete data in returns, invoices, or supporting documents. Refund processing is highly data-driven, and even small inconsistencies can lead to rejection, deficiency memos, or prolonged verification.

Type of Mismatch – Description

• GSTR-1 vs GSTR-3B: Outward supply details (export invoices) reported in GSTR-1 not matching with taxable value/tax paid in GSTR-3B.
• Invoice discrepancies: Incorrect invoice numbers, dates, or HSN/SAC codes between refund annexures and return data.
• Export documentation errors: Shipping bills, EGMs, or BRC/FIRC details missing or not linked to the corresponding invoices.
• Incomplete Statement: Missing invoice-wise data for export of services (with tax payment) required under Rule 89.
• Bank account mismatch: GST registration account doesn’t match PFMS validation records, leading to payment hold.

DEFICIENCY MEMO ISSUED

A Deficiency Memo (Form RFD-03) is issued by the GST officer when your refund application (Form RFD-01) is found to be incomplete, incorrect, or non-compliant during the initial scrutiny. It stops the refund process and requires you to refile the application with corrections.

Step – What You Must Do

• Review the memo: Understand deficiencies raised — often includes detailed officer comments.
• Prepare fresh application: Correct all errors, recompile documents, revalidate returns and annexures.
• Refile new RFD-01: This will generate a new ARN (Application Reference Number).
• Keep track of deadlines: The two-year time limit for filing refund remains based on the original taxable event, not the new ARN.

IMPORTANT NOTES
✓ You cannot respond to RFD-03 to “fix” the original application — it is not like an SCN (Show Cause Notice).
✓ Officers often use RFD-03 in place of rejection, especially when issues are procedural or technical in nature.

BANK ACCOUNT NOT VALIDATED

In the GST refund process, once your refund is sanctioned through RFD-06 and payment advice is issued via RFD-05, the actual transfer of funds depends on successful bank account validation through the Public Financial Management System (PFMS). If your bank account is not validated, the refund cannot be credited to your account.

Cause – Example

• Mismatch in account details: Account number or IFSC code incorrect in GST portal.
• Non-operational or closed account: Bank account no longer exists or is inactive.
• Account not in business name: Bank account is in a personal name or unrelated entity.
• Bank not PFMS-integrated: Some cooperative or rural banks are not PFMS-enabled.

How to Resolve the Issue

• Log in to GST Portal
• Navigate to: Services → Registration → Non-Core Amendment
• Update your bank account details with a correct, active, PFMS eligible bank account.

Upload Relevant Proof

Provide a cancelled cheque or bank statement showing:
o Correct account number
o IFSC
o Business/trade name matching your GST registration

Wait for Validation

PFMS usually completes validation within 2–7 working days. Once validated, the refund will be automatically re-processed if RFD 05 was already issued.

TIPS TO AVOID THIS ISSUE

• Ensure the bank account in your GST profile is:
• Active and regularly used
• Registered in the same legal/trade name as per GSTIN
• From a PFMS-partnered bank (most major Indian banks are)
• Check validation status regularly on the GST portal post-filing.

MISSING SUPPORTING DOCUMENTATION

In the GST refund process, especially for claims involving export of goods/services, unutilized ITC, or inverted duty, the absence of required supporting documents can lead to deficiency memos, delays, or outright rejection of your application.

CLARIFICATION OR SCN NOT RESPONDED TO (RFD-08)

If you do not respond within the prescribed time (usually 15 days), the refund claim is likely to be rejected.

TIMELINES TO REMEMBER

Action – Time Limit

• Submit reply to RFD-08 (via RFD-09): Within 15 days (extendable at officer’s discretion)
• File appeal if refund is rejected: Within 3 months from the date of RFD-06

JURISDICTIONAL ISSUES

Jurisdictional issues arise when a GST refund application is submitted but gets stalled or rejected because it is not under the correct tax authority’s control. This problem can delay processing, lead to miscommunication, or even invalidate the claim until rectified.

HOW TO PREVENT OR RESOLVE JURISDICTIONAL ISSUES

• Verify your jurisdiction: Check your GST portal profile: Dashboard → View Profile → Jurisdiction. Make sure it’s correctly mapped to either Central or State GST authority based on your activity and location.
• Amend registration if needed: If you’ve moved business location or changed your nature of supply (e.g., switched between goods and services), file a non-core amendment to update jurisdiction.
• Reach out to the correct officer: Contact the GST helpdesk or jurisdictional authority to raise a manual reallocation request, if necessary.

SELF-DIAGNOSIS CHECKLIST FOR DELAYED REFUNDS

Use this checklist to review each stage of your refund application and pinpoint where the delay might be occurring.

QUESTIONS TO ASK

Application Filing Stage

• Have you filed Form RFD-01 under the correct refund category?
• Did you receive an ARN (Application Reference Number) confirmation?
• Were all mandatory documents (invoices, FIRC/BRC, LUT, declarations, etc.) uploaded?
• Is your refund amount correctly calculated and matched with returns?

Return Filing & Reconciliation

• Have GSTR-1 and GSTR-3B been filed for the relevant period?
• Do export invoices in GSTR-1 match the tax payment in GSTR-3B?
• Is there any inconsistency or short payment of tax declared?
• For IGST refunds on goods: Are shipping bills and EGMs filed and matched in ICEGATE?

Acknowledgment & Deficiency

• Was RFD-02 (Acknowledgment) issued within 15 days?
• If RFD-03 (Deficiency Memo) was issued, have you corrected and refiled?
• Was any SCN (RFD-08) issued? If yes, did you respond in RFD-09?

Bank & Profile Details

• Is your bank account correctly updated and active in the GST portal?
• Has your bank account passed PFMS validation?
• Is the account in your business’s legal/trade name?

Officer Review & System Status

• Has the officer issued a provisional refund (RFD-04) if applicable?
• Has the final refund order (RFD-06) been issued?
• Has RFD-05 (payment advice) been generated?
• Is the refund stuck in PFMS or marked “Payment Failed”?

Legal and Jurisdictional Factors

• Is your jurisdiction correctly mapped (Central/State GST)?
• Are you under any scrutiny or audit, which may hold refunds?
• Have you submitted the undertaking not to appeal if refund was partially rejected?

HOW TO USE GST PORTAL FOR SELF-TRACKING

STEP-BY-STEP: TRACK REFUND APPLICATION ON GST PORTAL

• Log in to the GST portal: https://www.gst.gov.in
• Go to: Services → Refunds → Track Application Status
• Choose one of the following:
  a. Select the period (From – To)
  b. OR Enter your ARN (Application Reference Number)
• Click Search

TO CHECK BANK ACCOUNT VALIDATION

• Go to: Services → User Services → View My Submitted Applications
• Filter by “Amendment of Registration Non-Core Fields”
• Check the status of your bank validation with PFMS.

ADDITIONAL SELF-SERVICE TOOLS

• Grievance Redressal Portal: https://selfservice.gstsystem.in
• Raise complaints for delays, portal issues, or PFMS rejections.
• Download Status Reports: Under Refunds → My Saved/Filed Applications you can download refund acknowledgment, RFD forms, and status logs.

RED FLAGS TO WATCH FOR

• ARN Generated, But No Acknowledgment (RFD-02) Within 15 Days
• Receipt of RFD-03 (Deficiency Memo)
• RFD-08 (Show Cause Notice) Issued
• Refund Status Shows “Payment Failed” or “Bank Not Validated”
• IGST Refund Not Reflected Despite Filing
• Excessive Processing Time
• Repeated Rejections Without Clear Reason

BONUS TIP: MONITOR REFUND TIMELINES

✓ If 60 days from RFD-02 have passed without sanction, you’re entitled to interest under Section 56 of the CGST Act.

Actionable Steps to Resolve and Escalate GST Refund Issues

When your GST refund is delayed or stuck without resolution, follow these escalation steps in sequence:

TRACKING APPLICATION ON GST PORTAL

• Log in to https://www.gst.gov.in
• Navigate to: Services → Refunds → Track Application Status
• Enter your ARN or select the date range.
• Review status: Filed, Acknowledged, SCN issued, Rejected, Paid, Payment Failed, etc.

SUBMITTING A GRIEVANCE ONLINE

• Visit: https://selfservice.gstsystem.in
• Click “Raise a Ticket”
• Choose Category: Refund → Sub-category based on issue.
• Enter ARN, GSTIN, description, and upload any screenshots or PDFs.
• Submit and note the Ticket ID for future tracking.

CONTACTING YOUR JURISDICTIONAL OFFICER

• Find your jurisdiction at: Dashboard → View Profile → Jurisdiction (Center /State)
• Visit CBIC portal: https://cbic-gst.gov.in → Contact Locator
• Search by GSTIN or state → Get officer contact details (email/phone).
• Reach out via email with ARN and issue summary or visit office if required.

CBIC/ICEGATE HELPDESK SUPPORT

• For ICEGATE-linked refund issues. For IGST Refunds on Exports of Goods Visit: https://www.icegate.gov.in

FILING A COMPLAINT ON CPGRAMS

• Go to: https://pgportal.gov.in
• Click on “Lodge Grievance” and select department:
  o Ministry of Finance → Department of Revenue → CBIC
• Fill in complaint details with:
  o GSTIN, ARN, officer’s name (if known), timeline, and issue.
• Upload any rejection letters or screenshots.
• Submit and track with Grievance Registration Number.

CONCLUSION

SUMMARY OF KEY TAKEAWAYS

The GST refund process, though structured, is prone to delays due to document mismatches, return discrepancies, jurisdictional confusion, and portal or officer-level issues.

Forms like RFD-01, RFD-02, RFD-03, RFD-06, and RFD-05 play crucial roles at each stage — knowing their purpose helps avoid procedural missteps.

Timely filing, accurate data reconciliation, validated bank details, and proactive follow-ups are essential to prevent refund blockage or rejection.

A single unresolved issue, such as a missing FIRC or failure to respond to an SCN (RFD-08), can stall your claim indefinitely unless addressed correctly.

WHEN TO CONSIDER PROFESSIONAL HELP

You’re dealing with repeated RFD-03s or rejections (RFD-06) without clear guidance.
Complex issues arise — like export service refunds, input tax credit disputes, or PFMS payment failures.
You’re facing high-value claims (>₹2 lakh) where documentation and accuracy are critical.
You need to file an appeal under Section 107 after a refund rejection.
Your team lacks bandwidth to handle routine reconciliations or compliance tracking.