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GST worked examples: refunds, input tax credit and correcting errors

Worked examples on tax paid under the wrong head, inverted-duty and export refunds, credit on buildings after Safari Retreats, and correcting GSTR-1 errors.

Published 4 October 2026

These worked examples cover the commonest refund claims, a frequently mistaken credit question, and how to correct tax paid under the wrong head or reported wrongly. Figures are illustrations; rules are those in force on 04.10.2026.

J.1 — IGST paid on what turns out to be an intra-State supply

Facts. A Delhi supplier charged and paid IGST of Rs. 1,80,000 on a Rs. 10,00,000 supply; the place of supply is later found to be in Delhi.

  1. The supplier pays the correct tax: CGST Rs. 90,000 + Delhi SGST Rs. 90,000.
  2. No interest is payable on that CGST and SGST (section 77(2) CGST Act and the SGST equivalent).
  3. The IGST is refunded (section 19(1) IGST Act) on an application in Form RFD-01 within two years from the date of paying the correct tax (Rule 89(1A)).

Result. Cash-neutral after the refund, without interest. The refund is outside the unjust-enrichment test (section 54(8)(d)).

J.2 — Refund under an inverted duty structure

Facts. A manufacturer's whole turnover of Rs. 1 crore is of goods taxed at 5% (output tax Rs. 5,00,000). In the period it took credit of Rs. 10,00,000 on inputs (goods) and Rs. 2,00,000 on input services.

  1. Credit accumulated because inputs bear a higher rate than outputs is refundable (section 54(3)(ii)), but only credit on inputs — not input services — counts as "net ITC" (Rule 89(5); upheld in Union of India v VKC Footsteps, Supreme Court, 2021).
  2. Rule 89(5), as amended from 05.07.2022: refund = (inverted-rated turnover × net ITC ÷ adjusted total turnover) − (tax payable on that turnover × net ITC ÷ ITC on inputs and input services).
  3. = (1 crore × 10 lakh ÷ 1 crore) − (5 lakh × 10 lakh ÷ 12 lakh) = Rs. 10,00,000 − Rs. 4,16,667 = Rs. 5,83,333.
  4. Claim in Form RFD-01 within two years of the due date of the return for the period.

Result. Rs. 5,83,333 refundable; the credit on input services stays in the ledger.

J.3 — Refund of credit on exports of services

Facts. A Delhi IT company exports services under a letter of undertaking. In the period, zero-rated turnover is Rs. 50 lakh, adjusted total turnover Rs. 60 lakh, and net credit Rs. 5 lakh.

  1. Refund under Rule 89(4) = zero-rated turnover × net ITC ÷ adjusted total turnover = 50 lakh × 5 lakh ÷ 60 lakh = Rs. 4,16,667.
  2. 90% is refunded provisionally within seven days of acknowledgement; the final order follows within sixty days of a complete application (section 54(6)–(7)). Interest runs at 6% if the refund is paid after sixty days (section 56).

Result. Rs. 4,16,667 refundable.

J.4 — Credit on constructing a building to be let out

Facts. A Mumbai developer builds a shopping mall to let out shops, paying Rs. 18 crore of GST on construction inputs and services.

  1. Credit is blocked on goods and services received for construction of an immovable property on one's own account, other than "plant or machinery" (section 17(5)(d)).
  2. In Chief Commissioner v Safari Retreats (2024) the Supreme Court held that a building could be "plant" if it was essential to the business of supplying services, and remanded the cases to apply that test.
  3. The Finance Act, 2025 then amended section 17(5)(d) with retrospective effect from 01.07.2017, replacing "plant or machinery" with "plant and machinery" as defined, so that a building cannot qualify.

Result. No credit on constructing the mall. Credit remains available on items that are plant and machinery, such as lifts or chillers, where they are not themselves part of the civil structure.

J.5 — Correcting a wrong GSTIN in GSTR-1

Facts. A supplier reported an invoice against the wrong customer GSTIN and noticed it in February, after 30 November following the end of the year.

  1. Errors in GSTR-1 can be rectified only up to 30 November following the end of the financial year, or the date of the annual return if earlier (section 37(3)).
  2. For a bona fide clerical error causing no loss of revenue, the Supreme Court has upheld relief allowing correction after the time limit (CBIC v Aberdare Technologies, 2025), and directed the CBIC to re-examine the timelines.

Result. Apply to the department for correction, relying on Aberdare; if refused, a writ petition is the remedy.

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