Indirect Tax Laws and Practice · Dispute Resolution Mechanism under GST

Consumer Welfare Fund under GST: Credits and Utilisation

Updated 11 October 2026 · Fact-checked

The Consumer Welfare Fund is a Government fund set up under section 57 of the CGST Act. It receives the amount referred to in section 54(5) (the unjust-enrichment amount not paid to the claimant), investment income and other monies. Under section 58 it is used for consumer welfare, on the Standing Committee's recommendations under Rule 97, with separate accounts audited by the CAG.

Understand Consumer Welfare Fund

Sometimes a taxpayer pays GST and later claims a refund, but the tax burden was already passed on to the buyer. Paying the money to the taxpayer would enrich him unjustly. The law therefore does not pay that amount to the taxpayer. It is credited to a special fund instead. That fund is the Consumer Welfare Fund.

Section 57 of the CGST Act says the Government shall constitute the Fund. Three things are credited to it: the amount referred to in section 54(5), any income from investment of the amount in the Fund, and such other monies received by it. All this happens in the manner prescribed.

Section 58 deals with use. All sums credited are used by the Government for the welfare of consumers, in the prescribed manner. The Government or the authority it specifies must keep proper and separate accounts and other records for the Fund. It must also prepare an annual statement of accounts in the prescribed form, in consultation with the Comptroller and Auditor-General of India.

Rule 97 of the CGST Rules fills in the detail. It lists what is credited, how payments to claimants are made, who audits the Fund, how the Standing Committee is formed and works, who can apply for grants, and what the Committee can do.

The main rule in Rule 97(1) is that all amounts of duty, central tax, integrated tax, Union territory tax and cess, along with income from investment and the other monies specified in the related provisions, are credited to the Fund. Two provisos then deal with section 54(5): an amount equal to 50% of the integrated tax determined under section 54(5) (read with section 20 of the IGST Act) is deposited in the Fund, and an amount equal to 50% of the cess determined under section 54(5) (read with section 11 of the Compensation Act) is deposited in the Fund.

If an amount already credited to the Fund is later ordered or directed to be paid to a claimant by the proper officer, appellate authority or court, it is paid out of the Fund.

Key rules to remember

Section 57: credits to the Fund: Fund = amount referred to in s.54(5) + income from investment + other monies received; Credited in the prescribed manner. The s.54(5) amount is the amount not paid to the claimant.
Section 58: utilisation: Sums credited are used by the Government for consumer welfare; separate accounts and an annual statement are kept; Form of the statement is prescribed in consultation with the CAG.
Rule 97(1): main credit rule: Credited = all amounts of duty / central tax / integrated tax / UT tax / cess + income from investment + other specified monies; This is the general rule. The 50% figures below are provisos to it, not the whole rule.
Rule 97(1) provisos: IGST and cess share: Deposit = 50% of IGST determined under s.54(5); and 50% of cess determined under s.54(5); IGST is read with section 20 of the IGST Act; cess with section 11 of the Compensation Act.
Rule 97(2): payment to claimants: Amount credited, then ordered or directed to be paid to a claimant, is paid from the Fund; Order may come from the proper officer, appellate authority or court.
Rule 97(3): audit: Accounts maintained by the Central Government are audited by the CAG; Do not say the department audits itself.
Rule 97(5): Committee meetings: Meets as necessary, generally four times a year; at least 10 days' written notice; quorum: Chairman or Vice-Chairman plus minimum three other members; Proceedings are invalid without them.
Rule 97(7A): publicity share: Committee makes available to the Board 50% of the amount credited to the Fund each year, provided funds for consumer welfare activities of the Department of Consumer Affairs are not less than ₹25 crore per annum; For publicity or consumer awareness on GST. The ₹25 crore condition relates to the Department of Consumer Affairs' funds.
Rule 97(7): application screening: Committee does not consider an application unless inquired into in material details and recommended by the Member Secretary; A frequent objective-question point.

How to solve Consumer Welfare Fund questions

Use this order for any question on the Fund, whether theory or a short case.

1Identify what the question asks: credits, utilisation, accounts, Committee or applicant.
2For credits, name section 57: the amount referred to in section 54(5), investment income and other monies.
3If an amount under section 54(5) is involved, it is credited to the Fund and not paid to the claimant. For the rule, state Rule 97(1): all such amounts of duty, central tax, integrated tax, UT tax and cess are credited. If 50% is mentioned, relate it to the provisos: 50% of the IGST and 50% of the cess determined under section 54(5).
4For use, quote section 58 (consumer welfare) and Rule 97 (Standing Committee recommendations, grants to applicants).
5For accounts, state separate accounts, annual statement, and CAG audit.
6For an applicant question, test the Explanation to Rule 97: Government, regulators, agencies with three years' consumer welfare work, consumer co-operatives, qualifying educational institutions, or a complainant seeking legal expenses.
7Check procedure: Member Secretary inquiry before the Committee considers the application.
8Write a one-line conclusion tied to the facts.

Quickest way: Four-box recall

When to use it: For MCQs and short notes where you have under two minutes.

Box 1, Source: s.57 gives the amount referred to in s.54(5), investment income, other monies.
Box 2, Use: s.58 gives consumer welfare, separate accounts, annual statement.
Box 3, People: Standing Committee (Chairman, Vice-Chairman, Member Secretary), applicants.
Box 4, Numbers: Rule 97(1) credits all such tax and cess amounts, with provisos of 50% of IGST and 50% of cess under s.54(5); 4 meetings a year, 10 days' notice, Chairman or Vice-Chairman plus 3 members; Committee makes 50% of the yearly credit available to the Board, provided Department of Consumer Affairs funds are at least ₹25 crore a year; 3 years' experience for agencies.

Common mistakes in Consumer Welfare Fund

Saying the whole refund claim of any taxpayer goes to the Fund.
Students link the Fund with all refunds.
Fix: Only the amount referred to in section 54(5), the amount not paid to the claimant, is credited. What is payable to the claimant is paid to him.
Treating the Fund as the department's own money for its expenses.
The 50% publicity provision creates confusion.
Fix: The Fund is for consumer welfare. Under Rule 97(7A) the Committee makes available to the Board 50% of the amount credited each year for GST publicity or consumer awareness, provided funds for consumer welfare activities of the Department of Consumer Affairs are not less than ₹25 crore per annum.
Saying the Fund is audited by the department or an internal auditor.
Students guess.
Fix: Rule 97(3) says the accounts maintained by the Central Government are audited by the CAG.
Mixing the old and current Committee meeting rule.
The footnote carries the earlier version: not less than once in three months.
Fix: Use the current text: as and when necessary, generally four times a year, with at least ten days' written notice.
Forgetting the quorum and Member Secretary conditions.
They look like minor procedure.
Fix: No proceeding is valid unless presided over by the Chairman or Vice-Chairman and attended by at least three other members. No application is considered without the Member Secretary's recommendation.
Counting every consumer organisation as an eligible applicant.
Students skip the three-year condition.
Fix: An agency must have been engaged in consumer welfare activities for at least three years and be registered under the Companies Act, 2013 or another law. The Committee may relax the period.

Worked examples

Example 1

State what is credited to the Consumer Welfare Fund under the CGST Act and how the Fund is used. Who audits its accounts?

Show the solution

Credits under section 57: the amount referred to in section 54(5), any income from investment of the amount credited, and such other monies received by it.
Under Rule 97(1), all amounts of duty, central tax, integrated tax, UT tax and cess, with investment income and other specified monies, are credited. The provisos require 50% of the integrated tax and 50% of the cess determined under section 54(5) to be deposited in the Fund.
Utilisation under section 58: used by the Government for welfare of consumers in the prescribed manner.
Under Rule 97, the Standing Committee recommends proper utilisation, including grants to applicants.
Accounts: section 58(2) requires proper and separate accounts and an annual statement. Rule 97(3) makes the Central Government's accounts subject to CAG audit.

Answer: The Fund receives the section 54(5) amount, investment income and other monies. It is used for consumer welfare on the Standing Committee's recommendations. Separate accounts are kept, and they are audited by the CAG.

Example 2

The Standing Committee has been called by a notice given 7 days before the meeting. The meeting is presided over by the Vice-Chairman in the Chairman's absence and attended by two other members. Is the proceeding valid?

Show the solution

Notice: Rule 97(5)(d) requires at least ten days' written notice to every member. Seven days is short.
Presiding officer: the Vice-Chairman may preside in the Chairman's absence, so this is fine.
Quorum: Rule 97(5)(f) requires attendance of a minimum of three other members. Only two attended.
Conclusion: the notice period and the quorum both fail.

Answer: The proceeding is not valid. The notice was shorter than ten days and fewer than three other members attended, even though the Vice-Chairman could preside.

Exam tips

Quote the section number: s.57 for credits and s.58 for utilisation. Rule 97 is the working procedure.
In MCQs, watch the numbers: 50%, ₹25 crore, three years, ten days, three other members, four meetings a year.
Link this topic to unjust enrichment and section 54(5) refunds, since examiners often ask them together.
Write the answer in short headed points: credit, use, accounts, Committee. Add a one-line conclusion for case-based parts.

Practice questions from Dispute Resolution Mechanism under GST

Consumer Welfare Fund in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

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Consumer Welfare Fund: frequently asked questions

What is credited to the Consumer Welfare Fund under GST?

Section 57 lists the amount referred to in section 54(5), income from investment of the Fund, and other monies received. Rule 97(1) credits all amounts of duty, central tax, integrated tax, UT tax and cess, and its provisos require 50% of the IGST and 50% of the cess determined under section 54(5) to be deposited in the Fund.

How is the Consumer Welfare Fund utilised?

Section 58 says the Government uses all sums for the welfare of consumers in the prescribed manner. The Standing Committee recommends grants and investments under Rule 97. Under Rule 97(7A), the Committee also makes available to the Board 50% of the amount credited each year for GST publicity or awareness, provided Department of Consumer Affairs funds for consumer welfare are not less than ₹25 crore per annum.

Who can apply for a grant from the Fund?

The Explanation to Rule 97 lists applicants: the Central or State Government, regulatory or autonomous bodies, agencies with three years in consumer welfare work, consumer co-operatives, qualifying educational institutions, and complainants seeking legal expenses after final adjudication.

Who audits the Fund?

Rule 97(3) says the accounts of the Fund maintained by the Central Government are subject to audit by the Comptroller and Auditor General of India. Section 58(2) also requires separate accounts and an annual statement.