GST Refund Interest Rate explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
If your GST refund is not paid within 60 days of a complete application, the government owes you interest. The rate is 6% a year, rising to 9% where the refund comes out of an order of an appellate authority, tribunal or court. Interest runs until the money reaches your bank account. Here is how to count the days, with worked examples.
Under s.56 of the CGST Act read with Notification 13/2017-CT, interest is 6% p.a. on a refund not paid within 60 days from the date of receipt of the application, for the period of delay beyond 60 days till the date of refund. Where the refund arises from an adjudicating, appellate, tribunal or court order that has attained finality, the rate is 9% p.a. The officer orders it in RFD-05 under Rule 94. Some periods of delay caused by the applicant are excluded under Rule 94(2).
The rule in three lines
- Clock starts on the date of receipt of the refund application. Rule 90 says the acknowledgement in RFD-02 shows the date of filing, and the s.54(7) period is counted from that date.
- Interest starts the day after the 60th day.
- Interest stops on the date of refund. The ICAI Refunds Handbook notes that tax is treated as refunded only when the amount is credited to the applicant's bank account, not when RFD-05 is issued.
| Situation | Rate | Law |
|---|---|---|
| Refund sanctioned under s.54(5) but paid after 60 days | 6% p.a. | s.56, Notn 13/2017-CT |
| Refund arising from an order of an adjudicating authority, Appellate Authority, Appellate Tribunal or court that has attained finality, paid more than 60 days after the application filed under that order | 9% p.a. | Proviso to s.56 |
| Refund withheld under s.54(11), later found due after appeal | Up to 6% p.a. | s.54(12) |
If your refund is already past 60 days, the first job is to find out where it sits. Our GST refund status support traces the ARN and the payment trail.
Example 1: 6% interest, straight delay (illustration)
- Refund application received and acknowledged: 10 January 2026
- Refund sanctioned: ₹10,00,000
- Amount credited to bank: 30 June 2026
Count 60 days. The date of receipt is excluded, so day 1 is 11 January.
| Stretch | Days | Running total |
|---|---|---|
| 11–31 January | 21 | 21 |
| 1–28 February (2026 is not a leap year) | 28 | 49 |
| 1–11 March | 11 | 60 |
The 60th day is 11 March. Interest runs from 12 March 2026.
Count the delay from 12 March to 30 June, both days counted:
| Stretch | Days |
|---|---|
| 12–31 March | 20 |
| April | 30 |
| May | 31 |
| June (to the 30th) | 30 |
| Total | 111 |
Interest = 10,00,000 × 6% × 111 ÷ 365 = 60,000 × 111 ÷ 365 = 66,60,000 ÷ 365 = ₹18,247 (rounded from ₹18,246.58)
Whether the credit date itself is counted is a matter of how the order is computed; a one-day difference here is about ₹164. Check the days stated in the RFD-05 interest order against your own count.
Example 2: with an excluded period (illustration)
Same facts, but during processing the officer issued a show cause notice in RFD-08, and the applicant took 25 days to reply in RFD-09.
Rule 94(2)(a), in force from 01.10.2023, excludes any time beyond 15 days of receiving the RFD-08 that the applicant takes to reply or submit documents. Here 25 − 15 = 10 days are excluded, and the illustration takes them off the period of delay.
Delay counted = 111 − 10 = 101 days Interest = 60,000 × 101 ÷ 365 = 60,60,000 ÷ 365 = ₹16,603 (rounded from ₹16,602.74)
Rule 94(2)(b) also excludes the time the applicant takes to give or validate correct bank details where the sanctioned refund could not be credited. A failed PFMS validation that is your bank's fault is not the department's delay. See PFMS bank account validation failed.
Example 3: 9% interest after an appellate order (illustration)
- The first appellate authority allows your appeal; the order is not challenged further and attains finality.
- You file the refund application consequent to that order, received on 1 April 2026. Refund due: ₹5,00,000.
- Credited to bank: 31 August 2026.
60 days: 2–30 April = 29 days; 1–31 May = 31 days; total 60. The 60th day is 31 May. Interest runs from 1 June 2026.
Delay: June 30 + July 31 + August 31 = 92 days.
Interest = 5,00,000 × 9% × 92 ÷ 365 = 45,000 × 92 ÷ 365 = 41,40,000 ÷ 365 = ₹11,342 (rounded from ₹11,342.47)
At 6%, the same delay would give ₹7,562. For the refund route after an appeal, see refund on account of an appellate or court order.
Points that change the count
- Deficiency memo. If an RFD-03 deficiency memo is issued, Rule 90(3) requires a fresh application, and the 60 days run from that fresh application.
- The Finance Act 2023 change. From 01.10.2023, s.56 reads "for the period of delay beyond sixty days from the date of receipt of such application till the date of refund", to be computed in the manner prescribed. Rule 94(2) was inserted from the same date.
- Provisional refund. If 90% was paid provisionally in time, the delay question is mostly about the balance. Work out interest on the amount that was actually late.
- No separate application. Interest is statutory. The officer should pass the interest order with the RFD-05 payment order. If it is missing or short, raise it in writing and, if needed, in appeal.
Deadlines for the officer are covered in GST refund time limit for department: 60 days and section 56 interest on delayed refunds.
Refund late and no interest in the order?
If your refund came after 60 days and the RFD-05 shows no interest, or fewer days than you count, we check the ARN trail, the RFD-08/09 dates and the bank-credit date and take it up with the officer. Start with our GST refund status support; for the wider process, see the GST refund hub.
Key takeaways
- Interest is 6% p.a. after 60 days from receipt of the application; 9% for refunds arising from a final appellate or court order.
- Day 1 is the day after receipt; interest starts on day 61 and runs to the bank-credit date.
- Reply time beyond 15 days of an RFD-08, and bank-detail delays, are excluded under Rule 94(2).
- A deficiency memo restarts the clock with the fresh application.
- Interest is ordered with RFD-05; check the days against your own count.
Read next
- Section 56: interest on delayed refunds
- RFD-05 payment order explained
- How many days a GST refund takes
- Refund withheld under section 54(10) and 54(11)
Disclaimer: Positions stated as on 30 September 2026, based on the CGST Act and Rules as amended, the Finance Act 2026, and the ICAI Handbook on Refunds under GST (January 2026). Verify current notifications before filing.