IGST Refund Withheld 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 shipping bills have gone through, the EGM is filed and GSTR-1 matches, but the IGST refund still has not been scrolled, you may have been flagged for verification on risk parameters. This does not mean the refund is lost. It means the claim has left the automated Customs track and needs a verification by the GST authorities before it is paid. Here is what the rules say, what the verification involves and how to move it along.
Rule 96(4)(c) of the CGST Rules allows the IGST refund on exported goods to be withheld where the Board, on data analysis and risk parameters, considers that the exporter's credentials, including its availment of ITC, need verification first. Under Rule 96(5A) the claim is then sent to the jurisdictional GST officer as a system-generated FORM GST RFD-01, deemed filed on the date of transmission, and is processed under Rule 89. The ICAI Refunds Handbook describes the verification procedure from Circular 131/1/2020-GST, including the exporter's information in Annexure-I, a 14-working-day verification window and escalation to the Chief Commissioner.
Why IGST refunds are withheld
Rule 96(4) lists three grounds for withholding an IGST refund on exported goods:
| Clause | Ground | What happens next |
|---|---|---|
| 96(4)(a) | The jurisdictional GST Commissioner asks for it under section 54(10) or 54(11) | Claim moves to the GST officer as a system-generated RFD-01 (Rule 96(5A)) |
| 96(4)(b) | The Customs officer finds the goods were exported in violation of the Customs Act | If Customs passes an order to that effect, the claim moves to the GST officer as RFD-01 (Rule 96(5B)) |
| 96(4)(c) | The Board, on data analysis and risk parameters, considers verification of credentials (including ITC) essential | Claim moves to the GST officer as a system-generated RFD-01 (Rule 96(5A)) |
Clause (c) is the "risky exporter" ground. The Refunds Handbook explains the background: the Government found cases where fake or ineligible ITC was being turned into cash through IGST refunds on exports. Under Circular 131/1/2020-GST, stringent risk-based checks using data analytics and artificial-intelligence tools pick out certain exporters for verification. The Handbook notes that the share of exporters selected is a small fraction of all refund claimants.
Withholding under clause (a) is a different situation, tied to pending returns or proceedings; see refund withheld under section 54(10) and 54(11).
If your scrolls have been held and you have not been told why, our IGST refund team can confirm the ground and prepare the verification file.
What the flag does
According to the Handbook's summary of the SOP:
- Refund scrolls are kept in abeyance until the verification report comes from the field formation.
- Export consignments are physically examined in full at the port while the exporter is flagged. Circular 16/2019-Customs brought in this examination; Circular 22/2019-Customs then allowed RMCC to taper it down gradually where earlier examinations found the shipping-bill declarations to be correct.
- The claim becomes an RFD-01. Under Rule 96(5A), the system-generated RFD-01 is deemed to be the refund application, filed on the date of transmission, and the exporter is informed through the common portal. Rule 96(5C) says it is dealt with under Rule 89, so it is decided by the GST officer, not Customs.
The verification procedure, step by step
The Handbook sets out the procedure from Circular 131/1/2020-GST:
- Intimation. Exporters whose scrolls are held should be informed at the earliest, by the jurisdictional CGST office or by Customs.
- Exporter submits Annexure-I. On being informed, or on its own, the exporter fills in the information in the format at Annexure-I to the circular and submits it to the jurisdictional CGST authority. The officer may ask for more.
- Verification within 14 working days. The jurisdictional CGST office is to complete verification within 14 working days of receiving the information. If it does not, the officer reports to a nodal cell in the Principal Chief Commissioner's or Chief Commissioner's office.
- Exporter may escalate. After 14 working days from submission, the exporter may email the jurisdictional Principal Chief Commissioner or Chief Commissioner of Central Tax.
- Next 7 working days. The Chief Commissioner should take action to have verification completed within the next 7 working days.
- Grievance after one month. If the refund is still pending beyond one month, the exporter can lodge a grievance at www.cbic.gov.in/issue with GSTIN, IEC, shipping bill number, port of export and the CGST formation where the details were filed.
| Stage | Who acts | Time frame in the SOP |
|---|---|---|
| Information in Annexure-I | Exporter | As soon as informed |
| Verification | Jurisdictional CGST office | 14 working days |
| Escalation | Exporter, by email to Chief Commissioner | After 14 working days |
| Completion push | Chief Commissioner's office | Next 7 working days |
| Grievance | Exporter, on CBIC portal | Pending over one month |
Preparing the verification file
The officer's focus is whether your ITC is genuine. A file that answers that question quickly is the most useful thing you can hand over:
- the completed Annexure-I proforma;
- the purchase register for the period, reconciled with GSTR-2B;
- evidence that key suppliers exist and are active: GSTINs, e-way bills, transport documents, payments through banking channels;
- the export register tied to shipping bills, EGM and GSTR-1 Table 6A;
- proof of realisation of export proceeds (BRCs), since Rule 96B allows recovery where proceeds are not realised.
Once the RFD-01 is with the GST officer, normal Rule 89 processing applies. That includes the possibility of a deficiency memo in RFD-03 (how to respond) and, if the officer proposes to reject any part, a show cause notice in RFD-08 with an opportunity to reply.
Illustration: An exporter has 40 shipping bills in a quarter with IGST of ₹30 lakh held. The ITC behind that IGST came from 12 suppliers. The exporter files Annexure-I with supplier-wise GSTR-2B matches, bank payment trails and e-way bills for all 12. Verification is completed within the SOP window, the refund is sanctioned, and the clean report becomes the basis for a review of the exporter's risk rating.
Getting the flag lifted
The Handbook records that risk assessment is meant to be reviewed: where examinations validate the declarations, RMCC may re-evaluate the risk and reduce physical examination. A clean verification report is the evidence that supports this.
Need help with a withheld IGST refund?
A risky-exporter flag holds up every shipment, not just one claim. We prepare the Annexure-I file, reconcile your ITC trail, deal with the jurisdictional officer and use the escalation steps in the SOP when timelines slip. See our IGST refund on exports service, or GST refund status support if you only need to trace where the claim is.
Key takeaways
- Rule 96(4)(c) allows IGST refunds to be withheld for verification on data analysis and risk parameters.
- The claim is transmitted to the GST officer as a system-generated RFD-01, deemed filed on transmission and processed under Rule 89.
- The SOP in Circular 131/1/2020-GST: Annexure-I, 14 working days, escalation, then 7 working days.
- If still pending after one month, lodge a grievance on the CBIC portal.
- The verification centres on genuine ITC, so a reconciled supplier trail is the core of the file.
Read next
- IGST refund status on ICEGATE
- IGST refund not received: GSTR-1 Table 6A mismatch
- RFD-08 show cause notice reply format
- Rule 96: shipping bill as refund application
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.