In May 2025, a significant system-level validation was deployed on the GST Portal to align with the compliance framework set forth under Para 6 of Circular No. 125/44/2019-GST dated 18th November 2019. This circular mandates that refund claims for any tax period may only be filed after furnishing all the due returns in FORM GSTR-1 and FORM GSTR-3B as applicable, on or before the date of filing the refund application.
However, exceptions to this rule exist for composition taxpayers, non-resident taxable persons, and Input Service Distributors (ISD). In such cases, returns in FORM GSTR-4 (along with CMP-08), FORM GSTR-5, or FORM GSTR-6, respectively, must be filed prior to filing a refund claim.
System Changes Implemented
To enforce this compliance requirement digitally, the GST system was enhanced to allow refund applications only when all relevant returns due up to the date of application had been filed by the taxpayer.
Issues Faced by QRMP Taxpayers
Following this update, taxpayers under the Quarterly Return Monthly Payment (QRMP) scheme began experiencing technical issues:
Invoices uploaded through the Invoice Furnishing Facility (IFF) for the first two months of a quarter (M1 and M2) were not being recognized by the system.
Even in cases where the GSTR-1 for the previous quarter was already filed, the system incorrectly flagged the returns for M1 and M2 of the current quarter as pending.
These discrepancies caused system blocks when refund applications were attempted between two quarters, even though compliance had already been met.
Resolution Implemented
The technical issues have now been resolved by the GSTN. QRMP taxpayers can now file refund claims for tax periods for which GSTR-3B has already been filed.
Important Advisory for QRMP Taxpayers
Taxpayers are advised not to include invoices filed through IFF in the refund application if the corresponding GSTR-3B has not yet been filed.
Ensure that all applicable returns (GSTR-1 and GSTR-3B) are filed up to the refund application date.
Filing refund applications without fulfilling the above conditions may lead to rejection or system errors.
Conclusion
This update reinforces the importance of timely filing of GST returns and aligns the refund filing process with the prescribed legal framework. Taxpayers, particularly those under the QRMP scheme, should be vigilant in their return filings to avoid any disruptions in refund processing.
Notification Reference: GSTN
10/06/2025