Updated: 15 September 2026

Section 54 of CGST Act - Refund of Tax

Section 54 of the Central Goods and Services Tax Act, 2017 is the principal statutory provision governing refund of GST, interest and other amounts. It also regulates refund of unutilised input tax credit, the time limit for filing refund claims, provisional refund in specified zero-rated cases, unjust enrichment, withholding or adjustment of refund, and the meaning of the "relevant date".

Quick rule: A refund application under Section 54(1) is generally required within two years from the applicable "relevant date", subject to the Act, the CGST Rules and category-specific provisions. Refund applications are ordinarily filed electronically in FORM GST RFD-01 where that form is prescribed.

What does Section 54 of the CGST Act cover?

Section 54 creates the statutory framework for claiming a refund of tax, interest paid on tax, or another amount paid under GST. The provision should be read with Chapter X of the CGST Rules, particularly the refund rules, and with the IGST Act where the claim concerns zero-rated supplies.

The statutory expression "refund" includes specified refunds relating to zero-rated supplies, deemed exports and unutilised input tax credit. The exact entitlement depends on the nature of the supply, the tax or credit involved, documentary compliance and any restrictions prescribed by law.

Section 54(1): time limit for GST refund

As a general rule, a person claiming refund must make the application before expiry of two years from the "relevant date". The relevant date is not identical for every refund category. It varies according to the event giving rise to the refund.

Refund situation	Relevant-date principle
Export of goods	Linked to departure, crossing of frontier or postal despatch, depending on the mode of export.
Deemed exports	Linked to furnishing of the return relating to the deemed-export supply.
Zero-rated supply to SEZ developer or SEZ unit where covered by the statutory explanation	Linked to the due date for furnishing the Section 39 return in respect of the supplies.
Export of services	Generally linked to receipt of permitted payment or issue of invoice, depending on whether payment follows or precedes completion of supply.
Refund arising from judgment, decree, order or direction	Date of communication of the judgment, decree, order or direction.
Inverted-duty refund of unutilised ITC	Due date for furnishing the Section 39 return for the period in which the refund claim arises.
Provisional assessment	Date of adjustment of tax after final assessment.
Claim by a person other than the supplier	Date of receipt of goods or services or both.
Residual cases	Date of payment of tax.

For notified specialised agencies, diplomatic missions and other persons covered by Section 55, Section 54(2) provides a special refund framework. The statutory period was extended from six months to two years by the Finance Act, 2022.

Section 54(3): refund of unutilised input tax credit

A registered person may claim refund of eligible unutilised input tax credit at the end of a tax period, subject to statutory restrictions. Broadly, refund of accumulated ITC is permitted for eligible zero-rated supplies made without payment of tax and for eligible inverted-duty cases where the rate of tax on inputs is higher than the rate on output supplies.

Refund is not automatic. The claimant must satisfy the conditions of the Act, the CGST Rules and applicable notifications. Restrictions can apply to notified supplies, export-duty situations and cases involving drawback of central tax or refund of integrated tax paid on the same supplies. For zero-rated supplies, Section 54 must also be read with the current provisions of the IGST Act and the rules governing the permitted refund route.

Important: The older version of the page stated that the relevant date for unutilised ITC was the end of the financial year. That wording is no longer correct for the inverted-duty category covered by Explanation 2(e). The applicable reference is the due date for furnishing the Section 39 return for the period in which the claim arises.

Section 54(4): evidence and unjust enrichment

A refund application must be supported by the prescribed documentary evidence showing that the refund is due. Where the doctrine of unjust enrichment applies, the applicant must also establish that the incidence of tax and interest has not been passed on to another person.

Section 54 contains a simplified declaration mechanism for claims below the statutory threshold specified in the provision, subject to the prescribed requirements. Whether the refund is paid directly to the applicant or credited to the Consumer Welfare Fund depends on Section 54(5), Section 54(8) and the facts of the claim.

Sections 54(5) to 54(9): sanction, provisional refund and payment

Final sanction

If the proper officer is satisfied that the whole or part of the claim is refundable, an order is made under the statutory and rule-based procedure. Amounts subject to unjust enrichment may be credited to the Consumer Welfare Fund, while the categories specified in Section 54(8) are paid to the applicant.

Provisional refund

For eligible zero-rated refund claims, Section 54(6) permits provisional refund of ninety per cent of the eligible amount, subject to the prescribed conditions, limitations and safeguards. Rule 91 governs the provisional-refund procedure and FORM GST RFD-04 is used for the provisional refund order.

Sixty-day period

Section 54(7) requires the refund order to be issued within sixty days from receipt of an application complete in all respects. Delayed refunds may attract interest under Section 56 of the CGST Act, subject to its conditions.

Direct payment under Section 54(8)

Section 54(8) identifies categories where the refundable amount is paid to the applicant instead of being credited to the Consumer Welfare Fund. These include specified export-related refunds, eligible unutilised ITC, tax paid on certain unprovided supplies, refunds under Section 77, and amounts where the incidence has not been passed on.

Sections 54(10) to 54(14): withholding, adjustment and minimum refund

The proper officer may, in circumstances specified by Section 54(10), withhold a refund or deduct unpaid tax, interest, penalty, fee or other amounts. The Finance Act, 2022 broadened the wording of Section 54(10) by removing the earlier limitation that referred only to refunds due under Section 54(3).

Section 54(11) separately permits withholding where an order giving rise to refund is under appeal or further proceedings, or other proceedings are pending, and the Commissioner forms the statutory opinion that grant of refund is likely to adversely affect revenue on account of malfeasance or fraud. An opportunity of hearing is required. Section 54(12) deals with interest where a refund withheld under sub-section (11) ultimately becomes payable.

A casual taxable person or non-resident taxable person must satisfy the return-filing condition in Section 54(13) before refund of advance tax deposited under Section 27(2). Section 54(14) provides that refund under sub-section (5) or (6) is not paid where the amount is less than Rs. 1,000.

How to claim a GST refund

The CGST Rules prescribe the operational refund process. In the usual electronic process, the taxpayer files FORM GST RFD-01 on the GST Portal with the required statements, declarations and supporting documents. The officer may issue an acknowledgement in RFD-02 or a deficiency memo in RFD-03. Provisional refund, where admissible, is dealt with through RFD-04; payment advice is issued in RFD-05; and the final sanction or rejection is communicated through RFD-06, subject to the applicable rules and opportunity of hearing.

Form	Purpose
GST RFD-01	Application for refund.
GST RFD-02	Acknowledgement of refund application.
GST RFD-03	Deficiency memo.
GST RFD-04	Provisional refund order.
GST RFD-05	Payment advice.
GST RFD-06	Final refund sanction or rejection order.

Practical points before filing

Identify the correct statutory refund category before computing limitation.
Determine the correct "relevant date" under Explanation 2 to Section 54.
Reconcile the refund amount with returns, electronic ledgers and supporting statements.
Check whether unjust enrichment applies and retain the prescribed evidence or declaration.
For accumulated ITC, verify the applicable Rule 89 formula, notifications and restrictions.
For zero-rated supplies, read Section 54 together with the current IGST Act provisions.
Ensure bank details and GST Portal registration particulars are valid for electronic disbursement.

For a complete understanding of refunds, also read Section 55 - Refund in Certain Cases, Section 56 - Interest on Delayed Refunds, Section 57 - Consumer Welfare Fund and Section 58 - Utilisation of Fund.

Legal update note: This article explains the operative structure of Section 54 and important amendments relevant to refund practice. For a transaction-specific claim, the Act should be read with the latest CGST Rules, notifications, circulars and the IGST Act provisions applicable on the date of supply and refund claim.