Interest on delayed GST refund — what you're owed
If a GST refund isn't sanctioned within the statutory timeline under Section 54, the taxpayer is entitled to interest on the delayed amount under Section 56 of the CGST Act. The rate is currently notified at 6% per annum (9% where the refund arises from an order passed in appeal or other proceedings), though these rates are set by periodic government notification and can change.
The statutory basis: Section 56
Section 56 of the CGST Act provides for interest where a refund isn't sanctioned within 60 days from the date of receipt of a complete refund application under Section 54(5). This interest is a statutory entitlement rather than something the taxpayer needs to separately prove — it's meant to compensate for the department holding on to funds beyond the prescribed processing window.
The applicable rate
The standard rate of interest on a delayed refund is currently notified at 6% per annum. Where the refund arises from an order passed in appeal or other proceedings — meaning the taxpayer had to pursue a dispute before the refund was sanctioned — the rate is currently notified at 9% per annum. Because these rates are set by government notification rather than fixed permanently in the statute, it's worth confirming the applicable rate at the time your specific claim is settled.
How the interest period is calculated
Interest generally runs from the day immediately after the 60-day period (from receipt of a complete application) expires, up to the date the refund is actually credited — not from the date the original application was filed, if the application needed additional documentation before being treated as complete.
Shunya's CA team handles GST refund filing end to end — eligibility check, RFD-01 filing, and follow-up until credited.
Talk to a CA →Is interest paid automatically or does it need to be claimed?
In principle, this is meant to be computed and paid along with the delayed refund itself, without a separate application. In practice, it's worth checking the sanction order to confirm whether interest has been included, and following up with the jurisdictional officer if a genuinely delayed refund is credited without it — since this is a statutory entitlement, not a discretionary benefit.
Why this matters beyond the interest amount itself
Tracking whether interest has been correctly applied is also a useful signal for whether a refund was processed within the statutory timeline in the first place — if interest wasn't paid despite an apparent delay, it's worth reviewing the sanction order and the underlying dates (application receipt date vs sanction date) rather than assuming the calculation was handled correctly by default.
Do I need to separately apply for interest on a delayed GST refund?
No separate application is generally required — interest under Section 56 is meant to be computed and credited along with the delayed refund itself once the department determines the statutory 60-day window from a complete application has been exceeded. That said, it's worth checking the sanction order to confirm interest has actually been included, and raising it with the jurisdictional officer if a delayed refund appears to have been credited without it.
This article is for general information only. For your specific situation, consult a practicing CA.
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