Types of GST refund claims explained
GST refunds broadly fall into five categories: export of goods or services (with or without payment of tax), inverted duty structure, excess balance in the electronic cash ledger, supplies to SEZ units and developers, and a set of less common categories such as deemed exports and refunds arising from appellate or assessment orders. Each category has its own eligibility conditions, refund formula, and documentation.
Refunds on export of goods or services
Exports are treated as zero-rated supplies under GST, meaning no tax is meant to be borne on goods or services that leave the country. There are two ways this plays out: an exporter can supply under a Letter of Undertaking (LUT) without paying IGST and later claim a refund of the input tax credit that has accumulated, or an exporter can pay IGST at the time of export and claim that tax back as a refund. Both routes are available; most regular exporters use the LUT route since it avoids locking up cash in tax payments upfront.
Refund due to inverted duty structure
An inverted duty structure arises when the GST rate on inputs is higher than the GST rate on the output supply — common in sectors like textiles, footwear, and fertiliser manufacturing. Because output tax liability is lower than the credit accumulated on inputs, unutilised credit builds up on the electronic credit ledger, and the excess can be claimed back through a separate refund category with its own formula.
Shunya's CA team reviews your filings, identifies the right refund category, and handles the RFD-01 filing end to end.
Talk to a CA →Refund of excess balance in the electronic cash ledger
Sometimes a business deposits more into its electronic cash ledger than it actually owes — through an over-estimated challan payment, a duplicate payment, or a change in liability after a return is revised. This excess balance can be claimed back as a refund at any time, subject to the standard two-year limit, and doesn't require the department to verify input tax credit, which typically makes it a more straightforward category to process.
Refund for supplies to SEZ units and developers
Supplies made to a Special Economic Zone (SEZ) unit or developer are also treated as zero-rated, similar to physical exports. Depending on whether the supply was made under LUT or with tax payment, either the supplier or the SEZ unit/developer claims the refund, subject to an endorsement confirming the goods or services were received for authorised operations.
Other refund categories
Beyond the four main categories above, GST law also provides for refunds in situations such as deemed exports (supplies notified as exports even though goods don't physically leave India, such as supplies to Export Oriented Units), tax paid on a supply later held to be non-taxable, and refunds arising from an appellate authority, tribunal, or court order that reduces or reverses an earlier tax demand.
Which category applies to you
Selecting the correct refund category matters because the GST portal requires it to be specified at the time of filing RFD-01, and it determines which formula, statement, and supporting documents apply. Filing under the wrong category is one of the more common reasons refund applications get delayed or sent back with a deficiency memo.
What's the difference between a zero-rated supply refund and an inverted duty structure refund?
A zero-rated supply refund applies to exports and SEZ supplies, where output tax is nil or not charged, and the exporter claims back accumulated input tax credit (or IGST paid, if tax was paid instead of using a Letter of Undertaking). An inverted duty structure refund applies to domestic supplies where the tax rate on inputs is higher than the tax rate on the output — the credit accumulates not because the supply is zero-rated, but because of the rate mismatch. Both result in unused input tax credit, but the eligibility conditions, formulas, and documentation differ.
This article is for general information only. For your specific situation, consult a practicing CA.
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