7 Common Mistakes to Avoid When Applying for GST Refund

Since GST started in 2017, it has changed how businesses in India deal with taxes. It's been six years, and the system has helped many companies. But when it comes to getting a GST refund, some mistakes can cause problems.

This article will show you the common mistakes to watch out for so you can get your refund without any issues.

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 7 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 ared 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. Non-compliance with RFD-01 and Section 54 & 55 of the GST Act

Submitting the RFD-01 form inaccurately or without proper supporting documents as prescribed under Section 54 & 55 of the GST Act can complicate the GST refund process, potentially delaying or denying claims.

7. 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.


“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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