GST Refunds: Process, Timeline and Common Reasons for Delay

A GST refund becomes due in several scenarios — most commonly for exporters, businesses with an inverted duty structure (input tax rate higher than output tax rate), or simply an excess balance sitting in the electronic cash ledger. The process and timeline are broadly the same across categories.

The standard process

1. File Form RFD-01 on the GST portal, selecting the correct refund category — this matters, since selecting the wrong category is a common cause of delay or rejection.
2. The system generates an acknowledgment once the application and documents are complete.
3. An officer reviews the claim — if documents are missing or something doesn't reconcile, a deficiency memo is issued, effectively resetting the process until it's addressed.
4. Once approved, the refund is credited, generally to the bank account linked to the GSTIN.

The 60-day rule

The officer is required to process a refund application within 60 days of submission. If the refund isn't paid within that window, interest becomes payable to the taxpayer on the delayed amount — commonly cited at 6% per annum, calculated from the end of the 60-day period.

Why refunds actually get delayed

• Mismatches between the refund statement and the underlying GSTR filings.
• Incomplete documentation — a very common, avoidable cause.
• Claims filed near or after the two-year limitation period from the relevant date for that refund category.
• Wrong refund category selected at the outset, which can require restarting the application under the correct category.

Practical advice

Reconcile the underlying returns before filing the refund claim, not after — a mismatch discovered by the officer costs far more time than one caught and fixed beforehand. Once filed, check the application status on the portal regularly and respond to any deficiency memo promptly and completely rather than piecemeal.

Key takeaways

• RFD-01 is the standard form across nearly all refund categories — selecting the correct category matters.
• Officers have 60 days to process a refund; delay beyond that triggers interest, commonly cited at 6% per annum.
• Mismatches and incomplete documents are the leading causes of delay — reconcile before filing, not after.