Chapter XI - Refunds
Section 56
Section 56: Interest on delayed refunds
Section 56 provides interest where a qualifying refund is not paid within sixty days; the actual interest rate is notified within statutory ceilings.
On this page
Need advice on Section 56?
This article is for general information. Refer to the Central Goods and Services Tax Act, 2017 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
If any tax ordered to be refunded under sub-section (5) of section 54 to any applicant is not refunded within sixty days from the date of receipt of application under sub-section (1) of that section, interest at such rate not exceeding six per cent. as may be specified in the notification issued by the Government on the recommendations of the Council shall be payable in respect of such refund for the period of delay beyond sixty days from the date of receipt of such application till the date of refund of such tax, to be computed in such manner and subject to such conditions and restrictions as may be prescribed: Provided that where any claim of refund arises from an order passed by an adjudicating authority or Appellate Authority or Appellate Tribunal or court which has attained finality and the same is not refunded within sixty days from the date of receipt of application filed consequent to such order, interest at such rate not exceeding nine per cent. as may be notified by the Government on the recommendations of the Council shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application till the date of refund.
Explanation.––For the purposes of this section, where any order of refund is made by an Appellate Authority, Appellate Tribunal or any court against an order of the proper officer under sub-section (5) of section 54, the order passed by the Appellate Authority, Appellate Tribunal or by the court shall be deemed to be an order passed under the said sub-section (5).
Introduction
Interest starts only after the statutory sixty-day period for the relevant application. The Act distinguishes an ordinary refund order from a final adjudicatory or appellate order.
Key takeaways
Ordinary refund delay
For a section 54(5) refund not made within sixty days after receipt of the application, interest applies to the delay at a notified rate capped at six percent.
Final order claims
Where a final adjudicatory or appellate order gives rise to a refund and payment is still not made within sixty days after the consequential application, a separately notified rate capped at nine percent can apply.
Calculation
The calculation manner and restrictions for the ordinary route are prescribed; the rate ceiling is not the automatically payable rate.
Ordinary refund delay
For a section 54(5) refund not made within sixty days after receipt of the application, interest applies to the delay at a notified rate capped at six percent.
Final order claims
Where a final adjudicatory or appellate order gives rise to a refund and payment is still not made within sixty days after the consequential application, a separately notified rate capped at nine percent can apply.
Calculation
The calculation manner and restrictions for the ordinary route are prescribed; the rate ceiling is not the automatically payable rate.
Practical checklist
Do
- Record the complete refund application receipt date.
- Identify whether a final adjudicatory or appellate order governs.
- Check the notified rate and prescribed calculation rules.
Avoid
- Assume a prescribed or notified detail without checking the applicable current instrument.
Frequently asked questions
Is six percent always the refund-interest rate?
No. Six percent is the statutory ceiling for the ordinary route; the applicable rate is notified.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026