GST Refund Entry 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.
A GST refund passes through your books in two steps: first the amount leaves the GST ledger and becomes a receivable when you file, and then the receivable is cleared when the money reaches the bank. Getting these entries right keeps your books in line with the GST portal, which is one of the first things an auditor reconciles.
When you file RFD-01, move the claimed amount out of the input GST (or electronic cash ledger) account into a GST Refund Receivable ledger, grouped under current assets. When the refund is credited after RFD-05, debit bank and credit the receivable. If part is rejected, write it back to input GST where PMT-03 re-credits it, or to an expense where it is lost. Interest under s.56 is income. Keep one receivable per ARN so the balance always matches the portal.
Ledgers to create first
Set up the ledgers once, and every refund afterwards follows the same pattern. Tally lets you choose any group; the grouping below is what most accountants use.
| Ledger | Suggested group | Purpose |
|---|---|---|
| Input CGST / SGST / IGST | Duties & Taxes (type of duty: GST) | ITC availed |
| Output CGST / SGST / IGST | Duties & Taxes (type of duty: GST) | Tax payable |
| Electronic Cash Ledger – GST | Current Assets (or Loans & Advances (Asset)) | Challan deposits, TDS/TCS credit |
| GST Refund Receivable (one per ARN or period) | Current Assets (or Loans & Advances (Asset)) | Amounts claimed, not yet received |
| Interest on GST Refund | Indirect Incomes | Interest under s.56 |
| GST Refund Written Off / Rates and Taxes | Indirect Expenses | Amounts finally rejected |
Keeping the cash ledger as a separate asset, rather than netting deposits against output tax, makes the refund of excess cash-ledger balance easy to trace. If you are claiming such a balance, our excess cash ledger refund service starts exactly from this reconciliation.
Entry 1: ITC refund on exports or SEZ supplies under LUT
When you export under LUT (s.16(3) IGST), you file RFD-01 for unutilised ITC and the portal debits your electronic credit ledger by the amount claimed (Rule 89(3)). Mirror that debit in the books on the date of filing.
Illustration. Refund claimed ₹5,00,000 (IGST ₹3,00,000, CGST ₹1,00,000, SGST ₹1,00,000).
| Stage | Debit | Credit |
|---|---|---|
| On filing RFD-01 | GST Refund Receivable ₹5,00,000 | Input IGST ₹3,00,000; Input CGST ₹1,00,000; Input SGST ₹1,00,000 |
| On receipt in bank | Bank ₹5,00,000 | GST Refund Receivable ₹5,00,000 |
Pass the first entry as a Journal voucher and the second as a Receipt voucher. The same pattern applies to inverted duty refunds.
Entry 2: Exports with payment of IGST
Under the IGST-paid route (s.16(4) IGST), the shipping bill is treated as the refund application (Rule 96). The foreign buyer does not pay the IGST, so the tax you charge on the export invoice is a receivable from the government, not from the customer.
| Stage | Debit | Credit |
|---|---|---|
| Export invoice | Debtor (foreign buyer) – invoice value; IGST Refund Receivable – IGST | Export Sales; Output IGST |
| Paying the IGST in GSTR-3B | Output IGST | Input IGST (or Electronic Cash Ledger) |
| Refund credited from ICEGATE | Bank | IGST Refund Receivable |
If you track several shipping bills, use bill-wise details on the receivable so that unpaid shipping bills stand out. For withheld or errored shipping bills, see IGST refund not received: Table 6A mismatch.
Entry 3: Refund of excess cash-ledger balance
Deposits made through PMT-06, and GST TDS/TCS credited to you, sit in the electronic cash ledger until used.
| Stage | Debit | Credit |
|---|---|---|
| Challan deposit | Electronic Cash Ledger – GST | Bank |
| GST TDS credited by a government buyer | Electronic Cash Ledger – GST | Debtor (the deductor, for the TDS portion) |
| Filing RFD-01 for the excess balance | GST Refund Receivable | Electronic Cash Ledger – GST |
| Refund received | Bank | GST Refund Receivable |
For the TDS side in detail, see refund of GST TDS credit in the cash ledger.
Entry 4: Partial rejection and PMT-03 re-credit
Refunds are often sanctioned in part. What you do with the shortfall depends on how the order treats it.
| Outcome in RFD-06 | Debit | Credit |
|---|---|---|
| ITC portion re-credited by PMT-03 | Input IGST / CGST / SGST | GST Refund Receivable |
| Amount adjusted against an outstanding demand (Rule 92(1)) | Demand payable (or the expense already provided) | GST Refund Receivable |
| Amount rejected, no appeal planned | GST Refund Written Off | GST Refund Receivable |
| Amount rejected, appeal filed | No entry yet; keep the receivable and disclose the dispute | – |
The ICAI Handbook on Finalisation of Accounts with GST Perspective lists two common audit findings here: refunds rejected or short-received but not adjusted in the books, and refunds filed without moving ITC to a refund receivable account. Both leave the credit ledger in the books larger than the portal balance.
Entry 5: Interest on delayed refund
If the refund is paid after 60 days of a complete application, interest under s.56 is paid along with it (6% p.a., or 9% where the refund flows from an appellate or court order).
| Stage | Debit | Credit |
|---|---|---|
| Refund with interest received | Bank (refund + interest) | GST Refund Receivable (refund); Interest on GST Refund (interest) |
Interest is income in the year received. Whether the refund itself is income is a separate question, covered in is a GST refund taxable income?. To check the interest amount, see GST refund interest calculation with example.
Month-end reconciliation checklist
- Receivable per ARN equals the amount pending on the portal (Track Application Status).
- Input GST ledgers equal the electronic credit ledger after refund debits and PMT-03 re-credits.
- Electronic Cash Ledger – GST in the books equals the portal cash ledger, head by head.
- Rejected amounts have either been written off, re-credited, or are under appeal and disclosed.
- Interest has been booked as income, separate from the refund.
Need help matching your refund ledgers to the portal?
If the receivable in your books no longer matches what the portal shows, or old cash-ledger balances have never been claimed, we can reconcile the ledgers and file what is due. See our cash ledger refund support and the wider GST refund service.
Key takeaways
- Move the claimed amount to a GST Refund Receivable ledger on the date of filing RFD-01, not on receipt.
- IGST charged on an export invoice under the IGST-paid route is a receivable from the government.
- Keep the electronic cash ledger as a separate asset ledger so excess balances are visible.
- Re-credit through PMT-03 goes back to input GST; final rejections go to an expense.
- Book s.56 interest as income, separately from the refund.
Read next
- Refund of excess balance in the electronic cash ledger
- Cash ledger refund time limit: Circular 166
- Re-credit of rejected refund through PMT-03
- Check GST refund amount after sanction
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.