GSTN has done this change in GST portal for hassle free tax refund claims

The Goods and Services Tax Network (GSTN) in an advisory dated August 28, 2025 said that the GST system has been enhanced to allow for claiming Goods and Services Tax (GST) refunds when individual components (minor heads) of a GST demand column showed negative balances and the overall cumulative balance was zero or positive.

Chartered Accountant Bimal Jain, founder, A2Z Taxcorp LLP, says “This is a very good advisory and I believe that it would genuinely help small businesses and others by unlocking precious capital locked in the GST system as they could not get a refund.”

What did GSTN say in the advisory about GST refunds

GSTN in the advisory dated August 28, 2025, said:

1. As per the available functionality, taxpayers could claim refunds under the category "On account of Assessment/Enforcement/Appeal/Revision/Any Other Order" (ASSORD) only if:

• The cumulative amount of the Demand ID showed a negative balance (i.e., refund eligible).
• The status of the Demand ID was "Refund Due".

This restriction prevented taxpayers from claiming refunds when individual components (minor heads) of a demand showed negative balances and the overall cumulative balance was zero or positive.

1. For the above scenario, several references have been made by the tax payers and tax officers stating that the taxpayers are not able to claim the refund. Accordingly the following changes have been implemented in the system:

• Refunds can now be claimed irrespective of the Demand ID status.
• Refunds are allowed even when the cumulative balance is positive or zero, provided any minor head has a negative balance.
• Only negative balances will be auto-populated in the refund application (Form RFD-01); taxpayers cannot claim any refund for the positive amounts within the demand.

3. Order Number Suggestions: The system automatically suggests the most recent demand order associated with a negative balance such as order-in-original, rectification order or appellate order etc.

• Tooltips: Clear guidance is provided near the Order No. and Demand ID fields to help taxpayers enter the correct details.

GSTN said: “A comprehensive user manual and FAQs will be shared shortly. In case of any discrepancies or system-related queries, a ticket may be raised with the GST helpdesk.”

Parag Mehta, partner, N. A. Shah Associates LLP, says: "The expectation for receiving refund when individual components (minor heads) of a GST demand column showed negative balances and the overall cumulative balance was zero or positive was an expectation of the trade for a long time. Substantial amount was getting blocked due to technical constraint inspite of positive orders. This advisory and system changes will help the trade by removing undue working capital blockage. Hopefully the comprehensive manual and FAQs are shared at earliest."

Hardik Kakadiya, president, Chartered Accountants Association Surat (CAAS), says: "GSTN has been changing the rules of the game in between and it is worthy to do so under the present law where the "Law of the land" is overridden by "Law of Portals". It is not so that due to this positive change in GSTN processing, a tax payer will surely get refund. The aura of refunds is reflected not only in its eligibility, but the eligibility, capability and standing of the applicant asking for refund for giving alms."

What was the problem with GST refunds due to which this advisory had to be issued?

Jain: “The problem with GST refunds was when the minor heads of the GST demand (like CGST, SGST, IGST, etc) showed a negative balance i.e. had a tax demand but the other heads of the GST demand had a positive (refund) or zero balance then the portal was not allowing GST refunds for the positive balance. For example: If a taxpayer had Rs 110 positive balance in a head of GST demand, but in one of the heads it was Rs 20 tax demand, so the portal was not allowing a GST refund for the Rs 110 amount.”

When are you eligible for GST refund?

According to a GST Council brochure, here’s the situations when you can become eligible for GST refund:
A claim for refund may arise on account of:

• export of goods or services;
• supplies to SEZs units and developers;
• supply of goods regarded as Deemed Exports;
• refund of taxes on purchase made by UN or embassies etc. under Section 55 of CGST Act, 2017;
• refund arising on account of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court;
• refund of accumulated Input Tax Credit on account of inverted rate structure; finalisation of provisional assessment;
• refund of pre-deposit;
• tax paid in excess/by mistake;
• Refunds to International tourists of GST paid on goods in India and carried abroad at the time of their departure from India (not notified yet);
• refund of tax paid in wrong head under Section 77 of CGST Act, 2017 & Section 19 of IGST Act, 2017 (treating the supply as intra-State supply which is subsequently held as inter-State supply and vice versa);
• refund on account of any other reasons.

GST Council’s brochure said: “Thus, practically every situation is covered. The GST law requires that every claim for refund is to be filed within 2 years from the relevant date.”