Section 56 of CGST Act - Interest on Delayed Refunds
Section 56 of the Central Goods and Services Tax Act, 2017 provides statutory interest where an eligible GST refund is not paid within the prescribed 60-day period. The provision should be read with Section 54 of the CGST Act and Rule 94 of the CGST Rules, 2017.
Meaning and scope of Section 56
Section 56 deals with interest on delayed refunds. Its object is to compensate an applicant when a refund that is legally due is not released within the statutory time. The section operates after a refund is ordered under Section 54(5) - Refund of Tax.
For an ordinary refund covered by Section 56, the statutory period is 60 days from the date of receipt of the application under Section 54(1). Once that period expires without payment, interest runs from the next day up to the date on which the refund is actually made.
Applicable interest rates
The Central Government prescribed these rates through Notification No. 13/2017-Central Tax dated 28 June 2017. The statutory text itself fixes ceilings of 6% and 9%, while the notified rates presently correspond to those ceilings.
Refund arising from a final appellate or court order
The proviso to Section 56 applies where a refund claim arises from an order of an adjudicating authority, Appellate Authority, Appellate Tribunal or court that has attained finality. If the consequential refund is not paid within 60 days from receipt of the application filed pursuant to that order, interest at the notified rate is payable from the day immediately after expiry of the 60-day period until the date of refund.
Explanation to Section 56
For Section 56, where an Appellate Authority, Appellate Tribunal or court makes a refund order against an order of the proper officer under Section 54(5), that appellate or judicial refund order is deemed to be an order passed under Section 54(5). This connects the appellate refund entitlement directly with the delayed-refund interest mechanism.
How interest on delayed refund is sanctioned
Rule 94 of the CGST Rules, 2017 governs the order sanctioning interest. Where interest is due under Section 56, the proper officer is required to issue an order along with payment advice in FORM GST RFD-05. The order specifies the delayed refund amount, the period of delay and the interest payable, and the interest is electronically credited to the applicant's specified bank account.
Section 56 at a glance
| Issue | Position |
|---|---|
| Relevant provision | Section 56, CGST Act, 2017 |
| Linked refund provision | Section 54 |
| Normal waiting period | 60 days from receipt of the refund application under Section 54(1) |
| Normal notified interest | 6% per annum |
| Final-order refund rate | 9% per annum under the proviso, subject to its conditions |
| Interest period | From the day immediately after expiry of 60 days until the date of refund |
| Procedure | Rule 94 and FORM GST RFD-05 |
Practical points for taxpayers
The date of receipt of the refund application is important because the 60-day period under Section 56 is measured from that statutory reference point. Applicants should preserve the application acknowledgement, refund sanction order, payment details and any appellate or court order relied upon for the refund.
Where interest is due but is not included with the delayed refund, the applicant may rely on Section 56 and Rule 94 while seeking sanction of the statutory interest from the proper officer.
Related CGST refund provisions
For the surrounding statutory scheme, see Section 54 - Refund of Tax, Section 55 - Refund in Certain Cases, Section 57 - Consumer Welfare Fund and Section 58 - Utilisation of Fund.
Updated: 15 September 2026. This article is intended as a statutory reference and general legal information. The facts of a particular refund claim may affect the application of the provision.