The sanctioned amount is not always the new bank receipt
CGST Rule 92(1) requires GST RFD-06 to show the entitled refund, any amount already provisionally refunded, outstanding-demand adjustment and the balance refundable. Rule 92(2) separately addresses withholding through RFD-07. This guide, checked on 28 October 2026, concerns the settlement reconciliation rather than the eligibility formula for the original claim. Never clear the entire refund receivable against a new bank receipt without explaining provisional payments, adjustments, recredits and unresolved balances. ICAI GST bare law, April 2026: section 54(10)–(11) and Rule 92(1), (1A), (2) and (4).
Validate the underlying demand before accepting an adjustment
Section 54(10) provides the stated withholding and deduction powers where its conditions are met. Review the actual liability, unpaid amount, relevant date and any stay; a demand-list extract alone should not decide the legal availability of deduction. Section 54(11) has its own Commissioner opinion and hearing conditions for the specified withholding situation. These numerical models stipulate legally valid adjustments where used. They do not state that every disputed demand or pending proceeding automatically permits recovery from a refund. ICAI GST bare law, April 2026: section 54(10)–(11) and Rule 92(1), (1A), (2) and (4).
Withholding is different from permanent rejection or recovery
Under Rule 92(2), Part A of RFD-07 records withholding and its reasons. When no longer liable to be withheld, Part B can order release. Do not continue using an omitted historical proviso that described a fully adjusted refund in Part A: read the operative rule. A withheld amount stays in a separate control population until its supported release or other legal outcome. It should not silently become a tax expense merely because cash has not arrived. ICAI GST bare law, April 2026: section 54(10)–(11) and Rule 92(1), (1A), (2) and (4).
Apply the cash-proportion rule only to its stated population
Rule 92(1A) covers the specified refund of amounts paid as tax, excluding its stated zero-rated-supply and deemed-export populations. The cash refund is proportionate to the cash debit against total tax payment for the relevant period; the remaining credit-paid component is recredited through PMT-03. Confirm that the case belongs to that sub-rule before applying a ratio. Do not extend this mechanism to every ITC refund or assume that an approved refund must all be delivered as cash. ICAI GST bare law, April 2026: section 54(10)–(11) and Rule 92(1), (1A), (2) and (4).
Separate sanction, payment order and actual disbursement
Rule 92(4) uses RFD-06 and the RFD-05 payment order for the payable refund, with the specified banking and consolidated-advice process. A sanction order is not bank-credit evidence. Maintain individual references for order, payment, adjustment and ledger recredit. The rule distinguishes the continuing validity of RFD-06 from financial-year revalidation of an undisbursed payment order; inspect the actual payment status before treating a year-crossing item as a fresh sanction requirement. ICAI GST bare law, April 2026: section 54(10)–(11) and Rule 92(1), (1A), (2) and (4).
Close a settlement bridge that an auditor can reproduce
Start with the legally supported sanctioned population and remove distinct prior payments, valid adjustments and separately tracked withheld or recredit components, applying the correct route to the actual case. Reconcile the result to bank and electronic ledgers. Keep rejected portions and their correction or appeal position outside a fictitious cash receipt; rejection follows its own procedure. This article does not calculate delayed-refund interest or infer interest entitlement from a reconciliation difference alone. ICAI GST bare law, April 2026: section 54(10)–(11) and Rule 92(1), (1A), (2) and (4).
Applicable primary references
ICAI GST bare law, April 2026: section 54(10)–(11) and Rule 92(1), (1A), (2) and (4)
Six worked illustrations
All facts and amounts below are fictional. Assumptions describe the model, not additional statutory rules.
Illustrative example 1: Basic settlement after provisional payment
Assume a valid sanction of ₹12,00,000 and distinct provisional cash already received ₹9,00,000, with no other adjustments. Remaining refundable balance is ₹3,00,000. Recording another ₹12,00,000 bank receivable would double-count the earlier receipt.
Illustrative example 2: Valid demand adjustment
Assume sanctioned refund ₹10,00,000 and legally valid distinct demand adjustment ₹2,00,000, with no provisional payment or withholding. Balance refundable is ₹8,00,000. Preserve the demand-adjustment evidence rather than posting an unexplained ₹2,00,000 bank shortfall.
Illustrative example 3: Both components in one bridge
Assume sanction ₹15,00,000, prior provisional receipt ₹9,00,000 and a separate valid adjustment ₹2,00,000. Remaining refund is ₹4,00,000: 15 − 9 − 2 lakh. Confirm the ₹2,00,000 was not already deducted from the stated provisional receipt population.
Illustrative example 4: Withholding release roll-forward
Assume ₹5,00,000 is validly withheld and a later supported release covers ₹3,00,000. The unresolved withheld balance is ₹2,00,000. A release order still needs its own disbursement or ledger evidence; it is not automatically a bank receipt.
Illustrative example 5: Proportionate cash and credit under the stated sub-rule
Assume a qualifying Rule 92(1A) case, total relevant tax payment ₹10,00,000 comprising cash ₹4,00,000 and credit ₹6,00,000, and sanctioned refund ₹2,00,000. Cash proportion is 40%, giving ₹80,000 cash and ₹1,20,000 credit recredit before any separately applicable adjustment.
Illustrative example 6: Explain an apparent bank shortfall
For the preceding stipulated split, assume cash credited ₹80,000 and PMT-03 recredit ₹1,20,000 are both evidenced. Together they settle ₹2,00,000. Comparing the whole sanction only with the bank would create a false ₹1,20,000 unresolved cash difference.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Identify the refund population | Applicable legal route and sanction eligibility |
| 2 | Retrieve the operative sanction | RFD-06 amount and components |
| 3 | Reconcile prior provisional payments | Actual cash receipt and order references |
| 4 | Validate proposed demand adjustments | Liability, unpaid amount, stay and statutory conditions |
| 5 | Separate withholding | RFD-07 Part A and reasons |
| 6 | Track supported releases | RFD-07 Part B and resulting payment status |
| 7 | Test Rule 92(1A) applicability | Exclusions and relevant payment population |
| 8 | Recompute cash-credit allocation | Cash debit ratio and PMT-03 evidence where applicable |
| 9 | Match payment and bank references | RFD-05, financial-year status and actual credit |
| 10 | Close unresolved balances | Bank, credit ledger, adjustment and withheld roll-forward |
Sixteen practitioner FAQs
1. Is the sanction always the new cash payment?
No. Reconcile prior payments and the applicable settlement components.
2. What form does Rule 92(1) identify?
GST RFD-06.
3. Can a demand listing alone prove adjustment is lawful?
No. Check the actual statutory conditions and liability status.
4. Must any stay be considered?
Yes. Review its scope and the applicable provision before accepting an adjustment.
5. Does every pending proceeding automatically justify withholding?
No. Apply the relevant section 54 conditions.
6. Which RFD-07 part records withholding under the operative rule?
Part A.
7. Which part can release a withheld refund?
Part B, under the Rule 92(2) proviso.
8. Is withholding necessarily permanent rejection?
No. Keep those distinct legal outcomes separate.
9. Can an old fully-adjusted-refund footnote replace the current rule?
No. Distinguish omitted wording from the operative text.
10. Does Rule 92(1A) apply to every refund category?
No. Verify its stated population and exclusions.
11. What ratio does its cash working use?
Relevant cash debit against total payment for the tax liability population specified by the rule.
12. What happens to the covered credit-paid portion?
The rule provides for PMT-03 recredit to the electronic credit ledger.
13. Does a PMT-03 recredit equal bank cash?
No. Reconcile the two destinations separately.
14. Does RFD-06 alone prove actual disbursement?
No. Obtain payment and bank or ledger evidence.
15. Can an undisbursed payment order need financial-year revalidation?
Check the operative Rule 92(4) provisos and actual status, separately from sanction validity.
16. Does a reconciliation gap establish interest entitlement?
No. Interest needs its own statutory and timing analysis.
Conclusion
Reconcile sanctioned refunds, provisional payments and lawful demand adjustments, while keeping withholding and electronic-credit recredit separate from bank receipts.