A CFO's checklist for pending GST refunds

Most large companies carry a GST refund balance on the books. Few can say how much of it will actually come back this year. The difference is usually a mix of claims not yet filed, claims stuck in deficiency, and claims quietly nearing their time limit.

These seven questions give a CFO a quick way to sort the balance into what is recoverable, what is at risk, and what is already lost.

Seven questions for your refund balance

1. Is it within the two-year window?

   Section 54 requires the application within two years of the relevant date, which differs by category. Age every claim against it.

2. Which category is it?

   Exports with payment of IGST, exports or SEZ supplies under LUT, inverted duty structure, and excess cash ledger balance each follow different rules.

3. For inverted duty, is the claim restricted?

   Refund covers unutilised credit on inputs, not input services or capital goods, and is barred for some goods notified under section 54(3).

4. Has an RFD-01 been filed?

   Only a filed RFD-01 on the GST portal is a claim. A ledger balance is not.

5. Is there an open deficiency memo?

   An RFD-03 deficiency memo means the claim must be refiled. Track whether the fresh application is inside the time limit.

6. Is it eligible for provisional refund?

   For zero-rated and, since the Rule 91(2) amendment, inverted duty claims, up to 90% can be released provisionally.

7. Is the department late?

   If the refund is not paid within 60 days of the application, interest under section 56 accrues in your favour.

How the categories differ

What changed in 2025–26

Two changes matter. First, Rule 91(2) of the CGST Rules was amended so that provisional refund of up to 90% extends to inverted duty claims, not only zero-rated supplies. Second, CBIC Instruction No. 06/2025-GST, dated 3 October 2025, directs officers to sanction provisional refunds on the basis of a system-generated risk score. Low-risk claims move quickly. Higher-risk claims get closer examination.

Officers have also been told not to withhold refunds on presumptive grounds. That gives companies a firmer footing when a claim is held without reasons.

A worked example

Consider a manufacturer with a ₹12 crore refund balance spread across claims from FY 2023-24 to FY 2025-26 (illustrative). Running the seven questions sorts it quickly.

Here ₹5.2 crore can realistically come back in months, and ₹4.5 crore more with work on deficiencies and unfiled claims. The ₹1.1 crore of input-service credit is not refundable under the inverted duty formula, and the ₹1.2 crore past the limit is gone. The honest recoverable figure is closer to ₹9.7 crore than ₹12 crore, and the timing depends on how fast the open items are fixed.

The exercise takes days, not weeks, when the claim data sits in one place. It usually takes longer because it does not.

Where balances get stuck

In our experience the losses come from process, not law. Claims filed late in the window leave no room to cure a deficiency memo. Inverted duty claims include input services and get cut. Excess cash sits in the ledger because nobody filed for it.

Interest is the other forgotten line. When the department takes longer than 60 days, section 56 interest is due, but it is rarely tracked or pursued.

Common mistakes

• Counting from the wrong date. The relevant date for exports, inverted duty and excess cash is different in each case. Using the invoice date for everything misstates what is still in time.
• Refiling after a deficiency memo without urgency. A fresh application is needed, and the clock does not stop while it is prepared.
• Mixing periods. Claims that combine tax periods or categories are more likely to be questioned.
• Ignoring mismatches between returns. Differences between GSTR-1, GSTR-3B and GSTR-2B raise the risk score and slow the claim.
• Leaving interest out. Late refunds carry interest, but it is rarely recorded as money due.

Who acts

The tax team prepares and files RFD-01 and answers deficiency memos. Accounts payable and procurement must make sure supplier invoices appear in GSTR-2B, since refunds of credit depend on them. The proper officer issues acknowledgement, provisional refund and the final order. The CFO's role is to see the total, by status and age, every month.

What a good monthly report shows

A useful refund report fits on one page. It lists each open claim with its category, period, amount, relevant date, days left in the time limit, current status and the next action with an owner. It totals the balance into recoverable this year, at risk and lost, and adds a line for interest due on refunds paid late.

Reviewed monthly, this report changes behaviour. Claims near their limit get filed first. Deficiency memos get answered in days rather than weeks. And the refund balance stops being a line in the trial balance and becomes a number someone is accountable for bringing down.

Turning the list into a number

Run the seven questions over every open item and you get three totals: recoverable this year, at risk, and lost. That is the number a CFO should see every month. Our GST Refund Recovery practice builds it for clients and reports progress in a refund tracker sent each month (see what you receive). If you want a view of your own balance, talk to us.

General information only, not tax advice. Check the current law and your facts before acting.