Summary of this article
The Goods and Services Tax Network (GSTN) has introduced a crucial change on its portal to make refund claims smoother for taxpayers.
In its advisory dated August 28, 2025, GSTN announced that businesses can now claim refunds even in cases where individual tax components (minor heads) under a GST demand show negative balances, but the overall balance is zero or positive.
Taxpayers will find it a little easier to claim their pending GST refunds now. The Goods and Services Tax Network (GSTN), in an advisory issued on August 28, has notified a tweak in the portal to fix a long-standing problem that was holding back refunds in some cases.
Until now, the system only permitted refunds when the overall balance of a demand was negative and the status of the Demand ID showed “Refund Due.” This means that if one component of a tax demand, say CGST, SGST or IGST, showed a small negative balance, but the other heads together added up to zero or positive, the refund could not be claimed at all.
Many businesses have complained that this left significant sums blocked in the system, despite having favourable orders in their favour.
What has changed?
With the latest change, refunds can now be applied for even if the overall balance is not negative, as long as there is a negative figure under any one of the minor heads.
Here’s what will happen now: The portal will only auto-populate those negative balances in Form RFD-01, so taxpayers will not be able to claim refunds against the positive entries. At the same time, the system will suggest the most recent relevant demand order, such as a rectification or appellate order, and tooltips have been added to guide users in filling the details correctly.
How will this help businesses?
This adjustment should help businesses, particularly smaller ones, unlock working capital that was previously tied up due to these restrictions. For example, if a taxpayer had a refundable balance of Rs 110 under one head but a demand of Rs 20 under another, the earlier portal would block the entire refund. That issue has now been addressed.
The network has said that a detailed user manual and FAQs will soon be released. Moreover, it has notified that any discrepancies can be reported to the helpdesk.
Refunds under GST can arise in multiple situations, exports, supplies to SEZs, deemed exports, excess tax payments, refunds ordered by appellate authorities or courts, accumulated input tax credit under an inverted duty structure, and others. The law requires all such claims to be filed within two years from the relevant date.
By removing what was essentially a system glitch, the latest update is expected to speed up the refund process and provide some much-needed relief to taxpayers.
