Last reviewed: 13 November 2026. Two of the most common refund situations have nothing to do with exports. Tax is paid twice or in excess through a return, or tax is paid under the wrong head, IGST on what was an intra-State supply, or CGST and SGST on what was inter-State. Both are refundable, but on different footing: wrong-head tax is refunded under section 77 once the correct tax is paid, while excess tax is refunded only if it was not passed on.
Part of our GST refund series. For every refund category, the common process, time limits and interest, start with the complete GST refund guide.
Wrong head: IGST versus CGST and SGST
Place of supply decides the tax. If a supply was treated as inter-State and IGST was paid, but it was in fact intra-State (or the reverse), the supplier must pay the correct tax and can then claim refund of the tax wrongly paid. Section 77(2) of the CGST Act and section 19(2) of the IGST Act provide that no interest is payable on the correct tax paid in such a case.
| Step | Action |
|---|---|
| 1 | Determine the correct place of supply and the correct tax |
| 2 | Pay the correct tax (through the return or DRC-03, as appropriate) and issue or amend the invoice |
| 3 | File RFD-01 under the category for tax paid on an intra-State supply subsequently held to be inter-State, or the reverse |
| 4 | Attach the invoice-wise statement and proof of payment of the correct tax |
Rule 89(1A) sets the time limit at two years from the date of payment of tax under the correct head. Circular 162/18/2021-GST clarified that section 77 covers a wrong head identified by the taxpayer as well as one determined by an officer, and that where the correct tax had been paid before 24 September 2021, the two years ran from that date. Wrong-head refunds are paid to the applicant without the unjust enrichment test, under section 54(8)(d).
Where the recipient has taken credit of the wrong tax, it must reverse that credit and take credit of the correct tax, so the supplier and recipient should settle the correction together.
Excess tax paid
Typical cases: the same invoice reported twice in GSTR-1 and tax paid twice in GSTR-3B; output tax paid at 18% on a supply taxable at 5%; tax paid on a supply that was later cancelled after the period for a credit note had expired. The first remedy is to adjust it in a later return where section 34 or section 39(9) still allows. Once that is no longer possible, the excess is claimed in RFD-01 under the excess payment of tax category.
- Relevant date: the date of payment of tax (section 54, Explanation 2(h)).
- Unjust enrichment: the refund goes to the applicant only if the tax was not collected from the customer. Otherwise it is credited to the Consumer Welfare Fund.
- Evidence: a declaration that the incidence was not passed on; where the claim exceeds ₹2 lakh, a certificate from a chartered accountant or cost accountant under rule 89(2)(m).
Worked example: wrong head
A Thane consultant raises invoices of ₹10,00,000 to a client's Gujarat registration with IGST of ₹1,80,000. On review, the services were contracted and received by the client's Mumbai office, which should have been billed. The consultant issues fresh invoices to the Mumbai GSTIN with CGST and SGST of ₹90,000 each, pays them in the return for the month (no interest under section 77), and files RFD-01 for the ₹1,80,000 IGST within two years of that payment. The Gujarat registration reverses its IGST credit and the Mumbai registration takes the CGST and SGST credit.
Common gaps
- Claiming refund before the correct tax is actually paid.
- No invoice trail linking the wrong-head invoice to the corrected one.
- For excess payment, no evidence that the tax was not charged to the customer.
- Applying after two years, especially for wrong-head payments made before 24 September 2021.
The related situations of SEZ supplies charged with CGST and SGST and unused cash in the ledger have their own pages.
Frequently asked questions
Can I get a refund of IGST paid on an intra-State supply?
Yes. Pay the correct CGST and SGST, then claim refund of the IGST under section 77 of the CGST Act and section 19 of the IGST Act in RFD-01, within two years of paying the correct tax. No interest is payable on the correct tax.
What is the time limit for a wrong-head GST refund?
Rule 89(1A) allows two years from the date of payment of tax under the correct head. Where the correct tax was paid before 24 September 2021, Circular 162/18/2021-GST counts the two years from 24 September 2021.
Does unjust enrichment apply to refund of excess GST paid?
Yes. Excess tax is refunded to the applicant only if it was not passed on to the customer. Above ₹2 lakh, rule 89(2)(m) requires a CA or cost accountant certificate. Wrong-head refunds under section 77 are not subject to this test.
Should I claim a refund or adjust excess tax in the next return?
Adjust it in a later return where section 34 or section 39(9) still permits, as that is quicker. A refund under the excess payment category is needed once the adjustment window has closed.
Does section 77 apply if the officer found the wrong head?
Yes. Circular 162/18/2021-GST clarified that section 77 covers cases where the taxpayer identifies the wrong head and cases where it is determined by the officer.
We review eligibility, build the computation and reconciliations from your books and returns, file the RFD-01, and handle deficiency memos, show cause notices and appeals until the claim is closed. The outcome rests with the proper officer; our work is to put a complete, defensible claim in front of them.
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This article is for general information and does not constitute advice on any specific case. Sources: sections 54 to 56 and 77 of the CGST Act, 2017; rules 89 to 97 of the CGST Rules, 2017 as amended by Notification No. 05/2026-Central Tax dated 26 October 2026; Notification No. 03/2026-Central Tax; CBIC circulars cited in the text. Rules, forms and portal functionality change; confirm the current position on the CBIC tax repository and the GST portal before filing. Firm details: Somesh Chandak & Associates, Chartered Accountants, Unit 119, 1st Floor, Centura Square IT Park, SG Barve Road, Wagle Estate, Thane West 400604. FRN 158694W.