GSTN Updates Refund Process for Recipients of Deemed Export: Changes to Calculation Formats, ITC Allocation and Filing Requisites

The Goods and Services Tax Network (GSTN) has announced a series of updates and structural changes to the refund filing process for taxpayers claiming refunds under the category “Refund by Recipient of Deemed Export”, made effective from 8 May, 2025.

The updates are primarily aimed at streamlining and clearing out the refund process, while introducing key revisions to the filing requirements, refund computation tables, and treatment of Input Tax Credit (ITC) balances in the Electronic Credit Ledger (ECL).

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The changes are expected to ease compliance, particularly for entities that may have faced delays or data inconsistencies in past filings.

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A key change announced is that refund applications under this category are no longer required to be filed in chronological order of tax periods. Taxpayers now have the flexibility to file for refunds without specifying the “From Period” and “To Period,” which was mandatory priorly.

However, the GSTN has emphasized that all relevant returns, including GSTR-1 and GSTR-3B, must be filed up to the date of the refund application, failing to do so may render the refund application invalid or subject to rejection.

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A key update pertains to the revision of the “Amount Eligible for Refund” table within the refund application interface. The new table is designed to reflect a more transparent and structured view of refund eligibility based on deemed export invoices.

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• Column 1 will auto-populate the available balance in the Electronic Credit Ledger at the time of filing.
• Column 2 auto-populates the Net ITC of deemed exports based on invoices uploaded in Statement 5B.
• Column 3 shows the total refund claim based on those invoices and is editable downward
• Column 4 auto-calculates the maximum eligible refund amount in accordance with the debit order logic defined in Circular No. 125/44/2019-GST dated November 18, 2019.
• Column 5 captures the shortfall, if any, where the ECL does not hold sufficient balance under specific tax heads.

Aggregation of Taxes

Through the latest update, GSTN has introduced a more integrated and optimized functionality to maximize the amount of refund that can be claimed.

Unlike the previous approach that required sufficient balances under each major tax head (IGST, CGST, SGST/UTGST), the new mechanism aggregates the claim and compares it with the total ITC available across all heads. The mechanism allows for more efficient allocation of available credit and reduces the risk of refund rejections initiated solely due to head-wise imbalances.

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GSTN has also advised taxpayers to carefully ensure that all supporting documents, particularly Statement 5B with invoice-level data, are accurate and complete. Any technical issues encountered during the refund process can be reported through the GST Self-Service Portal.

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The changes aim to mitigate issues arising from discrepancies in system-generated data with submissions by taxpayers and compliance issues within the deemed export refund process.

To Read the full text of the Order CLICK HERE

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