Key Update for GST Refund Applications for Quarterly Taxpayers

In a sig­nif­i­cant devel­op­ment aimed at ensur­ing com­pli­ance with exist­ing GST refund reg­u­la­tions, the Goods and Ser­vices Tax Net­work (GSTN) has intro­duced a sys­tem-lev­el val­i­da­tion in May 2025, aligned with the stip­u­la­tions of Para 6 of Cir­cu­lar No. 125/44/2019-GST dat­ed 18.11.2019. This move is expect­ed to stream­line the refund appli­ca­tion process while rein­forc­ing the impor­tance of time­ly return filing.

Background of the Circular

As per Para 6 of the afore­men­tioned cir­cu­lar, any refund claim for a tax peri­od is admis­si­ble only after the tax­pay­er has filed all the due returns in FORM GSTR‑1 and FORM GSTR-3B up to the date of fil­ing the refund appli­ca­tion. Excep­tions are pro­vid­ed for:

• Com­po­si­tion tax­pay­ers (required to file GSTR‑4 and GST CMP-08)
• Non-res­i­dent tax­able per­sons (required to file GSTR‑5)
• Input Ser­vice Dis­trib­u­tors (ISDs) (required to file GSTR‑6)

This pre­con­di­tion is essen­tial to ensure that only com­pli­ant tax­pay­ers are able to claim refunds under GST.

System Update on the GST Portal

In accor­dance with the cir­cu­lar, the GST por­tal has now been updat­ed to enforce this require­ment via sys­tem-lev­el val­i­da­tion. From May 2025 onwards, refund appli­ca­tions are per­mit­ted only if the tax­pay­er has sub­mit­ted all the nec­es­sary returns due up to the date of refund filing.

Issue Faced by QRMP Taxpayers

Fol­low­ing the deploy­ment of this val­i­da­tion, cer­tain tech­ni­cal issues were report­ed by tax­pay­ers reg­is­tered under the Quar­ter­ly Return Month­ly Pay­ment (QRMP) scheme. Specif­i­cal­ly, the sys­tem was:

• Not rec­og­niz­ing invoic­es uploaded through the Invoice Fur­nish­ing Facil­i­ty (IFF) for the first two months (M1 and M2) of the quarter.
• Prompt­ing tax­pay­ers to file returns for M1 and M2 of the cur­rent quar­ter even when GSTR‑1 for the pre­vi­ous quar­ter had already been filed.
• Pre­vent­ing refund appli­ca­tions dur­ing the tran­si­tion­al peri­od between quar­ters despite compliance.

This cre­at­ed con­fu­sion and led to prac­ti­cal hur­dles in fil­ing refund claims, par­tic­u­lar­ly for tax­pay­ers who had dili­gent­ly fur­nished their returns through IFF and GSTR-3B.

Resolution of Technical Glitch

The GSTN has now resolved the afore­men­tioned tech­ni­cal issue. Tax­pay­ers under the QRMP scheme can file refund appli­ca­tions for invoic­es already cov­ered under the filed GSTR-3B. How­ev­er, it is cru­cial to note:

Invoic­es uploaded via IFF for which GSTR-3B is yet to be filed should not be includ­ed in the refund application.

This mea­sure ensures con­sis­ten­cy between filed returns and refund claims and pre­vents pre­ma­ture refund appli­ca­tions based on unfiled tax liabilities.

For any tech­ni­cal issues or sys­tem-relat­ed queries, tax­pay­ers can reach out to the GST Helpdesk via the offi­cial por­tal: https://selfservice.gstsystem.in