Rule 89 CGST Rules: Application for Refund in FORM GST RFD-01

Understand Application for Refund under Rule 89

Key rules to remember

Who files and how

FORM GST RFD-01, electronically, on the common portal (directly or via notified Facilitation Centre)

Rule 89(1). Not for refund of IGST paid on exported goods. Subject to Rule 10B. Persons covered by a section 55 notification are excluded.

Unjust enrichment: claim up to ₹2 lakh

Claim ≤ ₹2,00,000 → declaration that incidence of tax has not been passed on

Rule 89(2)(l). The text says 'does not exceed two lakh rupees', so exactly ₹2 lakh needs only a declaration.

Unjust enrichment: claim above ₹2 lakh

Claim > ₹2,00,000 → Annexure 2 certificate from a CA or cost accountant

Rule 89(2)(m). No certificate for an unregistered person who has borne the incidence of tax.

Exempt from declaration/certificate

Only where the claim falls within clauses (a), (b), (c), (d) or (f) of section 54(8)

The provisos to Rule 89(2)(l) and (m) say neither a declaration nor a certificate is needed in these cases. Rule 89 does not describe what those clauses cover, so confirm which clause your claim falls under in section 54(8) itself before claiming the exemption.

ITC refund ledger debit

Debit electronic credit ledger by the refund of ITC claimed

Rule 89(3).

Zero-rated supply without tax (bond/LUT)

Refund = (Turnover of zero-rated goods + Turnover of zero-rated services) × Net ITC ÷ Adjusted Total Turnover

Rule 89(4). Goods turnover is the lower of the zero-rated value and 1.5 times the value of like goods supplied domestically, as declared by the supplier. Export value is the lower of FOB value in the shipping bill and the invoice value.

Inverted duty structure

Max refund = {(Turnover of inverted rated supply of goods and services × Net ITC) ÷ Adjusted Total Turnover} − {tax payable on such supply × (Net ITC ÷ ITC availed on inputs and input services)}

Rule 89(5). Net ITC here means ITC availed on inputs during the relevant period.

How to solve Application for Refund under Rule 89 questions

1. 1Identify the nature of the refund: export of goods or services, SEZ supply, deemed export, inverted duty, excess payment, order-based refund, or other.
2. 2Confirm Rule 89(1) applies: the person is not covered by a section 55 notification, and the claim is not refund of IGST paid on exported goods.
3. 3State the form and mode: FORM GST RFD-01, electronically through the common portal, directly or via a notified Facilitation Centre.
4. 4Pick the matching document from Rule 89(2) clauses (a) to (kb) and list it with its key contents.
5. 5Apply the unjust enrichment test: compare the claim with ₹2 lakh to choose a declaration or a CA/CMA certificate, then check whether the section 54(8) exemption applies.
6. 6If ITC is being refunded, say that the electronic credit ledger is debited by the refund claimed. Apply the Rule 89(4) or 89(5) formula where the question gives figures.
7. 7Close with a clear conclusion on what to file and attach.

Quickest way: Claim type, then document, then declaration

Common mistakes in Application for Refund under Rule 89

• Saying a certificate is needed for every refund above ₹2 lakh.

  Students remember the limit but forget the provisos.

  Fix: Always add: no certificate for cases under section 54(8) clauses (a), (b), (c), (d) and (f), and none for an unregistered person who has borne the incidence of tax.

• Treating ₹2 lakh exactly as needing a certificate.

  Loose reading of the limit.

  Fix: The declaration applies where the claim does not exceed ₹2 lakh. A certificate is needed only above ₹2 lakh.

• Applying Rule 89 to refund of IGST paid on exported goods.

  Both are export refunds.

  Fix: Rule 89(1) excludes refund of integrated tax paid on goods exported out of India, and such a refund follows a separate procedure. Rule 89(1B) covers only the additional IGST paid on an upward price revision after export.

• Forgetting to debit the electronic credit ledger in an ITC refund.

  Focus stays on the form and documents.

  Fix: Under Rule 89(3), the applicant debits the electronic credit ledger by the amount of refund claimed.

• Mixing up who files in SEZ and deemed export cases.

  The provisos look similar.

  Fix: For SEZ supplies, the supplier of goods files after the goods are admitted in full in the SEZ for authorised operations, as endorsed by the specified officer. The supplier of services files with evidence of receipt of services for authorised operations, as endorsed by the specified officer. For deemed exports, the recipient may file, or the supplier if the recipient does not avail ITC and gives an undertaking.

• Filing a refund of the advance tax deposit before the last return.

  The last proviso is easy to skip.

  Fix: A refund after adjusting tax payable out of the section 27 advance tax is claimed only after the last required return has been furnished.

Worked examples