- Short answer
- Yes if drawback is only basic customs or Drawback Rules duty; that export's IGST refund bars it; central-tax drawback leaves eligible State tax credit
- Applies to
- Refunds of unused input tax credit on zero-rated supplies made without payment of tax
- What decides it
- Duties covered: central tax blocks the refund except eligible State tax credit; basic customs duty alone does not
- Current circular
- Circular 125/44/2019-GST: drawback of duties rebated under the Drawback Rules, 2017 keeps the refund open
Which claims block the input GST refund?
Section 54(3) of the CGST Act refunds unused input tax credit on zero-rated supplies made without payment of tax — what you claim back after exporting under a letter of undertaking. A proviso to section 54(3) names two cases where no refund is allowed:
Provided also that no refund of input tax credit shall be allowed, if the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid on such supplies.
So drawback that covers central tax, or an IGST refund on the same supplies, bars the input GST refund for those supplies — but Circular 125/44/2019-GST says refund of eligible State tax credit stays available after central-tax drawback.
Which drawback still lets you claim the refund?
Circular 24/24/2017-GST was wider; Circular 37/11/2018-GST narrowed that bar, and Circular 125/44/2019-GST superseded both for refund applications filed from September 26, 2019:
What decides it is which duties your drawback covers. Circular 37/11/2018-GST said drawback of basic customs duty alone leaves the refund available; Circular 125/44/2019-GST keeps it open for drawback of duties rebated under the Drawback Rules, 2017. Drawback of central tax removes it, apart from the State tax exception above.
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