Calculate the compensable delay, not merely the age of the refund claim
For a qualifying CGST refund under section 56, the ordinary notified interest rate is 6% per annum after the sixty-day period. The 9% rate belongs to the statutory final-order route and its consequential application conditions; an ordinary claim does not move to 9% merely because it is old. Rule 94 requires specified applicant-caused periods to be excluded. The practical working therefore needs principal, application date, actual credit date, applicable route and an evidenced exclusion calendar.
This guide examines CGST law as at 23 October 2026 and uses 2026 claims after the Rule 94(2) exclusions became effective on 1 October 2023. It does not assume that every export refund, ledger balance or State tax claim follows identical statutory machinery. Read sections 54–56 and rules 90, 92 and 94 in ICAI’s 2026 bare-law compilation, Notification 13/2017–Central Tax dated 28 June 2017 and CBIC Circular 125/44/2019–GST, paragraph 34 together. The later Act and rule govern over inconsistent older procedural guidance.
The start and end of the clock require documentary proof
Use the legally relevant receipt of the refund application, supported by the ARN and acknowledgement trail. A deficiency memo, fresh application, disputed completeness or unusual litigation history needs its own legal assessment; do not silently select whichever date yields the most interest. For the clean examples below, the accepted application date is stipulated, the receipt day is excluded, sixty full days expire, and interest runs from the following day through the actual bank-credit day.
Paragraph 34 of the CBIC circular treats the refund as completed on bank credit. A sanction order and payment order are evidence of processing, not necessarily evidence that money reached the applicant. Obtain the bank statement and portal/PFMS trail. Where amounts are credited in instalments, split the principal: the paid portion stops accruing at its credit date while the unpaid portion continues, subject to any applicable exclusions. Do not charge interest on interest or treat an amount finally rejected as a delayed sanctioned principal.
Apply the two Rule 94 exclusions precisely
Rule 94(2)(a) excludes the time beyond fifteen days from receipt of an RFD-08 notice that the applicant takes to furnish RFD-09 or additional documents or reply. Keep the actual notice-receipt date and each submission timestamp. A routine request is not automatically an RFD-08 event. Rule 94(2)(b) addresses time taken by the applicant to furnish correct bank details or validate them when the sanctioned refund could not be credited to the supplied account. Obtain the failed-credit and correction history; do not label an unexplained departmental processing interval as applicant delay.
Build dated exclusion intervals and intersect them with the otherwise interest-bearing interval. Avoid subtracting the same day twice when supported intervals overlap. A period outside the compensable interval cannot reduce that interval again. A calculation sheet should show both gross delay and net compensable days, so a reviewer can reproduce the result without reading a long email chain.
| Component | Calculation or test | Supporting record |
|---|---|---|
| Clock | Application receipt + sixty days; then actual bank credit | ARN, acknowledgement and bank statement |
| Exclusions | Qualifying intervals inside the interest period | RFD-08/09 timestamps and bank correction trail |
| Amount | Delayed principal × annual rate × eligible days / 365 in these 2026 cases | Instalment schedule and unrounded working |
Distinguish a final-order claim from a long-running ordinary claim
The proviso to section 56 refers to a claim arising from a specified authority’s or court’s order that has attained finality, followed by an application consequent to that order and delay beyond sixty days. Preserve the order, finality evidence and consequential application. Do not mechanically apply 9% from the original claim’s sixty-first day. This guide does not resolve contested entitlement to overlapping historical periods; its final-order illustration states the qualifying route and application date expressly.
Present a reproducible request for the interest order
Submit a concise reconciliation identifying the refund order, principal, credit instalments, rate basis, day count, exclusions and requested interest. Rule 94 provides for the proper officer’s order and RFD-05 payment order specifying the delayed amount, period and interest. Keep the bank account validated. The numerical results below use simple interest with a 365-day year, no leap-year interval, and show paise for transparent checking; the actual sanctioned payment must follow applicable rounding requirements. A separate escalation or remedy decision should be based on the actual response and procedural facts, not an invented automatic portal entitlement.
Worked illustrations
These illustrations use fictional facts and expressly stated assumptions. Amounts are Indian rupees unless a different currency or unit is specified. They are independent examples, not findings about any actual client.
Illustrative example 1: Ordinary refund credited after ninety elapsed days
A complete accepted application is received on 1 April 2026 for ₹10,00,000. Sixty days expire on 31 May. Bank credit is on 30 June, giving thirty interest days, 1–30 June inclusive. With no exclusions, interest at 6% is ₹10,00,000 × 0.06 × 30/365 = ₹4,931.51.
Illustrative example 2: Credit on the sixtieth day
Using the same 1 April receipt date and ₹10,00,000 principal, bank credit occurs on 31 May 2026. This is the end of the sixty-day interval, so eligible interest days are zero and section 56 ordinary interest in this clean case is ₹0.
Illustrative example 3: One day matters at the boundary
On those same accepted facts, a 1 June 2026 bank credit produces one interest day. The calculation is ₹10,00,000 × 0.06/365 = ₹164.38. Treating the interval as a rounded number of months would lose this boundary distinction.
Illustrative example 4: A supported bank-correction exclusion
A ₹10,00,000 qualifying ordinary refund has the thirty-day gross interest interval 1–30 June 2026. Assume the failed-credit records establish ten distinct days within that interval as applicant time covered by Rule 94(2)(b). Eligible days are 30 − 10 = 20; interest is ₹3,287.67. The exclusion is a stipulated supported fact, not an assumption that every bank delay belongs to the applicant.
Illustrative example 5: Reply after the fifteen-day allowance
Application receipt is 1 April 2026 and ₹10,00,000 is credited on 30 July. The otherwise interest-bearing interval is sixty days, 1 June–30 July. RFD-08 is received on 1 June and RFD-09 is submitted on 1 July, thirty elapsed days later. Assume no other submission complexities. The fifteen days beyond the fifteen-day allowance, 17 June–1 July, fall inside the interest interval and are excluded. Forty-five eligible days produce ₹7,397.26 at 6%.
Illustrative example 6: Two credits require two principal-period lines
Of an accepted ₹10,00,000 claim received on 1 April 2026, ₹5,00,000 is credited on 30 June and ₹5,00,000 on 30 July, without exclusions. The first instalment has thirty eligible days and the second sixty. Interest is ₹2,465.7534 + ₹4,931.5068 = ₹7,397.26 before final payment rounding. Applying sixty days to the full principal would overstate the result.
Illustrative example 7: A qualifying final-order consequential application
Assume the section 56 proviso applies: the order has attained finality and the accepted consequential application for ₹10,00,000 is received on 1 April 2026. Bank credit is on 30 June and no exclusion arises. The thirty days beyond 31 May give ₹10,00,000 × 0.09 × 30/365 = ₹7,397.26. This example does not award 9% for earlier periods merely because an appeal occurred.
Ten-step verification table
| Step | Verification | Evidence to retain |
|---|---|---|
| 1 | Confirm that the refund falls within the identified section 56 route | Tax head, refund category and statutory analysis |
| 2 | Verify principal actually ordered refundable to the applicant | Refund order and sanctioned/rejected reconciliation |
| 3 | Establish the legally relevant application receipt date | ARN, acknowledgement and deficiency history |
| 4 | For 9%, establish finality and consequential application conditions | Final order, finality record and fresh application |
| 5 | Calculate the sixty-day boundary using exact dates | Day-count schedule with receipt-day convention |
| 6 | Reconcile each credit to the bank statement | Payment order, PFMS status and bank credits |
| 7 | Identify only qualifying notice-response exclusions | RFD-08 receipt and RFD-09/document timestamps |
| 8 | Identify and evidence qualifying bank-detail exclusions | Failed-credit, correction and validation history |
| 9 | Split instalments and recalculate net days without double subtraction | Principal-period worksheet and independent arithmetic |
| 10 | Request and reconcile the interest order and payment | Reasoned submission, Rule 94 order, RFD-05 and receipt |
Sixteen practitioner FAQs
1. Does every refund earn interest from application day?
No. Establish entitlement and apply the statutory sixty-day interval and any prescribed exclusions.
2. Is the applicable ordinary rate 18%?
The notified ordinary section 56 refund rate is 6%. Do not confuse a taxpayer’s delayed-tax interest with refund compensation.
3. Does delay of a year automatically attract 9%?
No. The higher rate has a specific final-order and consequential-application framework.
4. Does issuing RFD-06 necessarily stop the clock?
For the bank-credit situation addressed here, examine actual credit rather than treating the sanction date as receipt of money.
5. What date proves receipt of money?
Use the bank credit supported by the statement and payment trail; reconcile differing portal timestamps.
6. Can an ARN be copied without reviewing deficiency history?
No. A deficiency or fresh filing can affect the relevant application analysis and must be examined.
7. Is every information request an exclusion event?
No. Apply the actual language of Rule 94, including the RFD-08 context, rather than a broad applicant-delay label.
8. Does a reply in fifteen days create the notice exclusion?
The prescribed notice exclusion concerns time beyond fifteen days. Retain evidence of when the notice was received and the reply furnished.
9. Can a departmental processing delay be called bank-validation delay?
Not without the required facts. Identify whose action was awaited and the failed-credit/correction history.
10. Should overlapping exclusion periods be subtracted twice?
A dated interval calculation should remove each qualifying day once. Show the overlap explicitly.
11. Can an exclusion before interest starts reduce later days?
Do not subtract a day that is outside the otherwise compensable interval from that interval again.
12. How are partial credits handled?
Track each principal portion to its own credit date and calculate the remaining delayed balance separately.
13. Is interest compounded in these examples?
No. They use simple annual interest on delayed principal, with transparent daily calculations.
14. Why show paise when the payment may be rounded?
Paise expose the underlying arithmetic. Apply the legally required final payment rounding separately.
15. Does this article prescribe an SGST rate for every State?
No. It addresses CGST. Verify the corresponding applicable State or other tax law and notification for that component.
16. What should an interest request attach?
The principal reconciliation, accepted receipt date, bank-credit evidence, rate basis, exclusion calendar and reproducible calculation.
Conclusion
An effective interest request is a dated principal reconciliation. Prove the correct application, rate route, actual credit and each exclusion before presenting the net compensable days and payment request.