Section 77 deals with tax paid under the wrong head. A supplier that treated an inter-State supply as intra-State (or the reverse) pays the correct tax and gets back what it wrongly paid, without interest on the correct tax.
Key points
- Under section 77(1) of the CGST Act, 2017 a registered person who paid CGST and SGST (or UTGST) on a supply later held to be inter-State is refunded those taxes in the prescribed manner.
- Under section 77(2) a person who paid IGST on a supply later held to be intra-State need not pay interest on the CGST and SGST now payable. Section 19 of the IGST Act is the mirror provision.
- The refund claim is made within two years from the date of payment of the correct tax (Rule 89(1A), from 24.09.2021; for earlier payments, within two years of that date).
The provisions
77(1)–(2)Tax paid under the wrong head
Statutory text
(1) A registered person who has paid the Central tax and State tax or, as the case may be, the Central tax and the Union territory tax on a transaction considered by him to be an intra-State supply, but which is subsequently held to be an inter-State supply, shall be refunded the amount of taxes so paid in such manner and subject to such conditions as may be prescribed.
(2) A registered person who has paid integrated tax on a transaction considered by him to be an inter-State supply, but which is subsequently held to be an intra-State supply, shall not be required to pay any interest on the amount of central tax and State tax or, as the case may be, the Central tax and the Union territory tax payable.
*Enforced w.e.f. 1st July, 2017.
- Rule 89(1A), CGST Rules (Notification 35/2021-Central Tax)
- Circular 162/18/2021-GST
Statutory text as published on the CBIC tax information portal, as on 03.10.2026; the numbered notes record each amendment. Official source
Common questions
- What if CGST and SGST were paid instead of IGST?
- Pay the IGST and claim refund of the CGST and SGST under section 77 of the CGST Act within two years of paying the IGST; no interest is payable on the IGST (section 19 of the IGST Act).
Commentary and case notes checked against the judgments and CBIC sources on 04.10.2026.
What it means
Circular 162/18/2021-GST clarified that "subsequently held" covers both a finding by the officer and the taxpayer's own discovery. The correct tax is paid first; the refund of the wrong tax follows in Form RFD-01. The refund is outside the unjust-enrichment test, being listed in section 54(8)(d).