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Published on 10 April 2025

Re-Credit Process for Erroneous GST Refunds in the Electronic Ledger

Re-crediting Erroneous Refunds in the Electronic Credit Ledger

Under Rule 86(4B), when a registered person deposits an erroneous refund sanctioned to them, the procedure is as follows:

Situations Requiring Re-credit

The re-credit applies in cases where the refund was deposited:

  • Under sub-section (3) of Section 54 of the Act.
  • Under sub-rule (3) of Rule 96, in contravention of sub-rule (10) of Rule 96.

Deposits must be made through FORM GST DRC-03, debiting the electronic cash ledger, either voluntarily or upon identification. A corresponding amount will be re-credited to the electronic credit ledger by the proper officer, executed via an order in FORM GST PMT-03A.

Types of Erroneous Refunds

The following erroneous refunds may necessitate re-credit:

  • Refunds of IGST obtained in violation of sub-rule (10) of Rule 96.
  • Refunds of unutilized ITC on exports of goods/services made without tax payment.
  • Refunds of unutilized ITC related to zero-rated supplies to SEZ developers/units without tax payment.
  • Refunds of unutilized ITC due to an inverted tax structure.

Procedure for Re-credit

Currently, as an automated functionality for these cases on the GST portal is under development, taxpayers must adhere to a specific procedure:

  1. Written Request: The taxpayer should submit a written request to the jurisdictional proper officer, using the format provided in Annexure-A. This request should aim to re-credit the amount corresponding to the refund that has been repaid via FORM GST DRC-03.

  2. Payment Verification: The proper officer will need to verify that the full amount of the erroneous refund has been repaid, including applicable interest as per Section 50 of the CGST Act and any penalties, if applicable. This verification relies on FORM GST DRC-03 showing a debit in the electronic cash ledger.

  3. Re-credit Execution: Upon satisfactory verification, the proper officer shall re-credit the corresponding amount to the electronic credit ledger. This is to be completed via an order in FORM GST PMT-03A, ideally within 30 days from the date the request for re-credit is received or from the date of full payment of the erroneous refund, whichever is later.

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