Section 54 of CGST Act, 2017 – Refund of tax

The Central Goods and Services Tax Act, 2017

Chapter-XI Refunds

Section 54: Refund of tax.

54. (1) Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years^c1 from the relevant date in such form and manner as may be prescribed:

Provided that a registered person, claiming refund of any balance in the electronic cash ledger in accordance with the provisions of sub-section (6) of section 49, may claim such refund in ¹[such form and] manner as may be prescribed.

(2) A specialised agency of the United Nations Organisation or any Multilateral Financial Institution and Organisation notified under the United Nations (Privileges and Immunities) Act, 1947, Consulate or Embassy of foreign countries or any other person or class of persons, as notified under section 55, entitled to a refund of tax paid by it on inward supplies of goods or services or both, may make an application for such refund, in such form and manner as may be prescribed, before the expiry of ²[two years] from the last day of the quarter in which such supply was received.

(3) Subject to the provisions of sub-section (10), a registered person may claim refund^c2 of any unutilised input tax credit at the end of any tax period:

Provided that no refund of unutilised input tax credit shall be allowed in cases other than–

(i) zero rated supplies made without payment of tax;

(ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated^c3 or fully exempt supplies), except supplies of goods or services or both as may be notifiedⁿ¹ by the Government on the recommendations of the Council:

³[***]

Provided also that no refund of input tax credit shall be allowed, if the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid on such supplies.

(4) The application shall be accompanied by—

(a) such documentary evidence as may be prescribed to establish that a refund is due to the applicant; and

(b) such documentary or other evidence (including the documents referred to in section 33) as the applicant may furnish to establish that the amount of tax and interest, if any, paid on such tax or any other amount paid in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such tax and interest had not been passed on to any other person:

Provided that where the amount claimed as refund is less than two lakh rupees, it shall not be necessary for the applicant to furnish any documentary and other evidences but he may file a declaration, based on the documentary or other evidences available with him, certifying that the incidence of such tax and interest had not been passed on to any other person.

(5) If, on receipt of any such application, the proper officer^c3 is satisfied that the whole or part of the amount claimed as refund is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund referred to in section 57.

(6) Notwithstanding anything contained in sub-section (5), the proper officer^c3 may, in the case of any claim for refund on account of zero-rated supply of goods or services or both made by registered persons, other than such category of registered persons as may be notified by the Government on the recommendations of the Council, refund on a provisional basis, ninety per cent. of the total amount so claimed, ⁴[***] in such manner and subject to such conditionsⁿ⁶, limitations and safeguards as may be prescribed and thereafter make an order under sub-section (5) for final settlement of the refund claim after due verification of documents furnished by the applicant.

(7) The proper officer^c3 shall issue the order under sub-section (5) within sixty days from the date of receipt of application complete in all respects.

(8) Notwithstanding anything contained in sub-section (5), the refundable amount shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to—

(a) refund of tax paid on ⁵[export] of goods or services or both or on inputs or input services used in making such ⁵[exports];

(b) refund of unutilised input tax credit under sub-section (3);

(c) refund of tax paid on a supply which is not provided, either wholly or partially, and for which invoice has not been issued, or where a refund voucher has been issued;

(d) refund of tax in pursuance of section 77;

(e) the tax and interest, if any, or any other amount paid by the applicant, if he had not passed on the incidence of such tax and interest to any other person; or

(f) the tax or interest borne by such other class of applicants as the Government may, on the recommendations of the Council, by notification, specify.

⁶[(8A) The Government may disburse the refund of the State tax in such manner as may be prescribed.]

(9) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any court or in any other provisions of this Act or the rules made thereunder or in any other law for the time being in force, no refund shall be made except in accordance with the provisions of sub-section (8).

(10) Where any refund^c2 is due ⁷[***] to a registered person who has defaulted in furnishing any return or who is required to pay any tax, interest or penalty, which has not been stayed by any court, Tribunal or Appellate Authority by the specified date, the proper officer^c3 may—

(a) withhold payment of refund due until the said person has furnished the return or paid the tax, interest or penalty, as the case may be;

(b) deduct from the refund due, any tax, interest, penalty, fee or any other amount which the taxable person is liable to pay but which remains unpaid under this Act or under the existing law.

Explanation.–For the purposes of this sub-section, the expression “specified date” shall mean the last date for filing an appeal under this Act.

(11) Where an order giving rise to a refund is the subject matter of an appeal or further proceedings or where any other proceedings under this Act is pending and the Commissioner is of the opinion that grant of such refund is likely to adversely affect the revenue in the said appeal or other proceedings on account of malfeasance or fraud committed, he may, after giving the taxable person an opportunity of being heard, withhold the refund till such time as he may determine.

(12) Where a refund is withheld under sub-section (11), the taxable person shall, notwithstanding anything contained in section 56, be entitled to interest at such rate not exceeding six per cent. as may be notifiedⁿ² on the recommendations of the Council, if as a result of the appeal or further proceedings he becomes entitled to refund.

(13) Notwithstanding anything to the contrary contained in this section, the amount of advance tax deposited by a casual taxable person or a non-resident taxable person under sub-section (2) of section 27, shall not be refunded unless such person has, in respect of the entire period for which the certificate of registration granted to him had remained in force, furnished all the returns required under section 39.

(14) Notwithstanding anything contained in this section, no refund under sub-section (5) or sub-section (6) shall be paid to an applicant, if the amount is less than one thousand rupees.

⁸[(15) Notwithstanding anything contained in this section, no refund of unutilised input tax credit on account of zero rated supply of goods or of integrated tax paid on account of zero rated supply of goods shall be allowed where such zero rated supply of goods is subjected to export duty.]

Explanation.—For the purposes of this section,–

(1) “refund” includes refund of tax paid on zero-rated supplies of goods or services or both or on inputs or input services used in making such zero-rated supplies, or refund of tax on the supply of goods regarded as deemed exports, or refund of unutilised input tax credit as provided under sub-section (3).

^c4(2) “relevant date” means—

(a) in the case of goods exported out of India where a refund of tax paid is available in respect of goods themselves or, as the case may be, the inputs or input services used in such goods,–

(i) if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India; or

(ii) if the goods are exported by land, the date on which such goods pass the frontier; or

(iii) if the goods are exported by post, the date of despatch of goods by the Post Office concerned to a place outside India;

(b) in the case of supply of goods regarded as deemed exports where a refund of tax paid is available in respect of the goods, the date^c5 on which the return relating to such deemed exports is furnished;

⁹[(ba) in case of zero-rated supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit where a refund of tax paid is available in respect of such supplies themselves, or as the case may be, the inputs or input services used in such supplies, the due date for furnishing of return under section 39 in respect of such supplies;]

(c) in the case of services exported out of India where a refund of tax paid is available in respect of services themselves or, as the case may be, the inputs or input services used in such services, the date of–

(i) receipt of payment in convertible foreign exchange ¹⁰[or in Indian rupees wherever permitted by the Reserve Bank of India], where the supply of services had been completed prior to the receipt of such payment;or

(ii) issue of invoice, where payment for the services had been received in advance prior to the date of issue of the invoice;

(d) in case where the tax becomes refundable as a consequence of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court, the date of communication of such judgment, decree, order or direction;

¹¹[(e) in the case of refund of unutilised input tax credit under clause (ii) of the first proviso to sub-section (3), the due date for furnishing of return under section 39 for the period in which such claim for refund arises;]

(f) in the case where tax is paid provisionally under this Act or the rules made thereunder, the date of adjustment of tax after the final assessment thereof;

(g) in the case of a person, other than the supplier, the date of receipt of goods or services or both by such person; and

(h) in any other case, the date of payment of tax.

---

References

Enforcement:

Enforced w.e.f. July 01, 2017 [Notification No. G.S.R. 658(E) dated 28.06.2017].

Amendments:

1. Substituted by Finance Act, 2022 w.e.f. 01.10.2022 [vide Notification No. 18/2022–Central Tax dated 28.09.2022], for the words “the return furnished under section 39 in such”.

2. Substituted by Finance Act, 2022 w.e.f. 01.10.2022 [vide Notification No. 18/2022–Central Tax dated 28.09.2022], for the words “six months”.

3. Omitted by Finance (No. 2) Act, 2024, w.e.f. 01.11.2024 [Notification No. 17/2024–Central Tax dated 27.09.2024], the proviso:

“Provided further that no refund of unutilised input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty:”.

4. Omitted by Finance Act, 2023 w.e.f. 01.10.2023 [vide Notification No. 28/2023–Central Tax dated 31.07.2023], the words “excluding the amount of input tax credit provisionally accepted,”.

5. Substituted by Central Goods and Services Tax (Amendment) Act, 2018, w.e.f. 01.02.2019 [vide Notification No. 2/2019–Central Tax dated 29.01.2019], for the words “zero-rated supplies”.

6. Inserted by Finance (No. 2) Act, 2019, w.e.f. 01.09.2019 [vide Notification No. 39/2019–Central Tax dated 31.08.2019].

7. Omitted by Finance Act, 2022 w.e.f. 01.10.2022 [vide Notification No. 18/2022–Central Tax dated 28.09.2022], the words “under sub-section (3)”.

8. Inserted by Finance (No. 2) Act, 2024, w.e.f. 01.11.2024 [Notification No. 17/2024–Central Tax dated 27.09.2024].

9. Inserted by Finance Act, 2022 w.e.f. 01.10.2022 [vide Notification No. 18/2022–Central Tax dated 28.09.2022].

10. Inserted by Central Goods and Services Tax (Amendment) Act, 2018, w.e.f. 01.02.2019 [vide Notification No. 2/2019–Central Tax dated 29.01.2019].

11. Substituted by Central Goods and Services Tax (Amendment) Act, 2018, w.e.f. 01.02.2019 [vide Notification No. 2/2019–Central Tax dated 29.01.2019], for the sub-clause (e):

“(e) in the case of refund of unutilised input tax credit under sub-section (3), the end of the financial year in which such claim for refund arises;”.

Notifications:

n1. Vide Notification No. 05/2017- Central Tax (Rate) dated 28.06.2017 [amended], No. 15/2017-Central Tax (Rate) dated 28th June, 2017 Govt notifies the goods on which no refund of unutilised ITC shall be allowed. No refund of unutilised input tax credit shall be allowed, where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on the output supplies of such goods (other than nil rated or fully exempt supplies): Notification No. 05/2017 – Integrated Tax (Rate) dated 28th June, 2017.

n2. Rate of Interest under Section 50, 54 and 56 of GST Act – CGST Notification No. 13/2017 – Central Tax dated 28.06.2017 and for IGST Act – Notification No. 06/2017 – Integrated Tax dated 28.06.2017.

n3. Conditions and safeguards for furnishing a Letter of Undertaking (LOU) in place of a Bond by a registered person who intends to supply goods or services for export/ zero-rated supply/ SEZ without payment of GST – Notification No. 37/2017 – Central Tax dated 04.10.2017.

n4. Proper Officers for the purpose of sanction of refund under Section 54 or Section 55 of the CGST Act – Notification No. 39/2017 – Central Tax dated 13.10.2017.

n5. Proper officers for the purposes of section 54 or section 55- Notification No. 11/2017 –Integrated Tax dated 13.10.2017.

n6. Refund on provisional basis shall not be allowed any person, who has not undergone Aadhaar authentication under rule 10B of the CGST, 2017 and any person, who is engaged in the supply of the goods Areca nuts, Pan masala, Tobacco and manufactured tobacco substitutes and Essential oils – Notification No. 14/2025 – Central Tax dated 17.09.2025.

Circulars:

c1. The provisions of sub-section (1) of section 54 of the CGST Act regarding time period, within which an application for refund can be filed, would not be applicable in cases of refund of excess balance in electronic cash ledger. [Circular No. 166/22/2021-GST dated 17.11.2021]. In case of export of electricity, the relevant date shall be the last date of the month, in which the electricity has been exported as per monthly Regional Energy Account (REA) issued by the Regional Power Committee Secretariat under regulation 2(1)(nnn) of the CERC (Indian Electricity Grid Code) Regulations, 2010. [Circular No. 175/07/2022-GST dated 06.07.2022]

c2. Subject to the provisions of the section 54(10) of the CGST Act, 2017, a manufacturer of such fabrics will be eligible for refund of unutilized ITC of GST paid on inputs [other than the input tax credit of GST paid on capital goods] in respect of fabrics manufactured and exported by him- Circular No. 18/18/2017-GST date 16.11.2017.

c3. Proper officer relating to provisions other than Registration and Composition, refer Circular No. 3/3/2017-GST dated 05.07.2017.

c4. A rectified refund application, submitted after correction of deficiencies, shall also have to be submitted within 2 years of the relevant date, as defined in the explanation after sub-section (14) of section 54 of the CGST Act. [Circular No. 125/44/2019-GST dated 18.11.2019]

c5. Clause (b) of Explanation (2) under section 54 of the CGST Act is applicable for determining relevant date in respect of refund of amount of tax paid on the supply of goods regarded as deemed exports, irrespective of the fact whether the refund claim is filed by the supplier or by the recipient. Further, as the tax on the supply of goods, regarded as deemed export, would be paid by the supplier in his return, therefore, the relevant date for purpose of filing of refund claim for refund of tax paid on such supplies would be the date of filing of return, related to such supplies, by the supplier. [Circular No. 166/22/2021-GST dated 17.11.2021]

c6. Only those goods which are actually subjected to export duty i.e., on which some export duty has to be paid at the time of export, will be covered under the restriction imposed under section 54(3) from availment of refund of accumulated ITC. [Circular No. 160/16/2021-GST dated 20.09.2021]

c7. For Fully electronic refund process through FORM GST RFD-01 and single disbursement, refer Circular No. 125/44/2019-GST dated 18.11.2019.

c8. The fabric processors shall be eligible for refund of unutilized ITC on account of inverted duty structure under section 54(3) of the CGST Act even if the goods (fabrics) supplied to them are covered under notification No. 5/2017-Central Tax (Rate) dated 28.06.2017. [Circular No. 48/22/2018-GST dated 14.06.2018]

c9. Clarification regarding removal of restriction of refund of accumulated ITC on fabrics. [Circular No. 56/30/2018-GST dated 24.08.2018]

c10. No bar in claiming refund by clubbing different months across successive Financial Years i.e. the restriction on bunching of refund claims across financial years shall not apply. Refund of accumulated ITC under Section 54(3)(ii) of the CGST Act would not be applicable in cases where the input and the output supplies are the same. [Circular No. 135/05/2020-GST dated 31.03.2020] 

c11. For cases related to advanced received, goods returned, TDS, refund etc., refer Circular No. 137/07/2020-GST dated 13.04.2020.

c12. Whether refund of TDS/TCS deposited in electronic cash ledger under the provisions of section 51/52 of the CGST Act can be refunded as excess balance in cash ledger? [Circular No. 166/22/2021-GST dated 17.11.2021]

c13. Filing an application for refund by unregistered persons.[Circular No. 188/20/2022-GST dated 27.12.2022]

c14. Mechanism for refund of additional IGST paid on account of upward revision in price of the goods subsequent to exports. [Circular No. 226/20/2024-GST dated 11.07.2024]