6 Common Mistakes to Avoid When Applying for GST Refund

Wondering how the recent surge in GST revenue impacts you?

With GST revenue growing by 12.4% during February 2023, reaching a whopping total of around ₹1,49,577 crore, there’s never been a better time to understand the GST refund process and the common pitfalls associated with it.

What is the GST Refund?

GST refund, applicable when one pays more GST than required or qualifies for an input tax credit, enables businesses and individuals to recover the paid tax on goods and services. This process may involve a GST audit to ensure compliance and accuracy of transactions.

For example, if you are an exporter and paid GST on goods that were later exported, you can claim a refund of the GST paid. GST registration and performing a GST registration status check are vital in this process.

Reasons Why Your GST Refund Application Might Get Rejected

The GST refund process can be a challenging task, and a small error can lead to potential complications.

Here are the 6 prime reasons behind most rejections:

1. Non-compliance with Local Tax Laws

Ensuring that all your business activities align with the local tax regulations is crucial. Any deviation can result in your refund application being dismissed.

2. Inaccurate Proration of GST ITC for Export and Domestic Sales

It's essential to correctly apportion the Input Tax Credit (ITC) between your export and domestic sales. Any inconsistency can be a red flag.

3. Lack of Vendor Invoice and Payment Documentation

Always maintain a clear record of vendor invoices and payment proofs. The absence of these documents can put your refund claim under suspicion.

4. Ineligible ITC Refund Claims

Input Tax Credit (ITC) serves as a mechanism to reduce the taxes paid on inputs from taxes to be paid on output. However, not every ITC can be claimed as a refund. The GST framework outlines specific conditions and categories of ITC that are refundable.

Unwarranted claims can cause your application to be outright rejected.

5. Mismatch Between Refund Claims and GSTR 2B

Your refund claims should be consistent with what's reported in your GSTR 2B. Discrepancies here can instantly invalidate your application.

6. Incomplete Application Details

While it might seem basic, many stumble here. Always double-check your application for completeness before submission.

For a smooth application process, always monitor your gst registration status check online to ensure everything is in order.

Don’t let these common mistakes stand in your way of claiming your rightful GST refund. B C Shetty & Co. - a team of highly dedicated chartered accountants based in Bangalore, offer a broad spectrum of financial and business solutions.

We are a full-service accounting firm. We offer many services like bookkeeping, tax advice, compliance help, and aiding in setting up foreign firms in India. Visit our website today for more information. By partnering with us, you can ensure seamless and error-free GST registration, filing, and refund processes.


“The information contained herein is only for informational purpose and should not be considered for any particular instance or individual or entity. We have obtained information from publicly available sources, there can be no guarantee that such information is accurate as of the date it is received, or it will continue to be accurate in future. No one should act on such information without obtaining professional advice after thorough examination of particular situation.”

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