GST RFD-07: adjustment and withholding of refunds

Part A: adjustment against outstanding demand

Where you owe an amount under an earlier order that has not been stayed or paid, the officer can adjust the sanctioned refund against that demand, fully or partly. The refund order shows the adjusted amount and only the balance is paid.

• Check that the demand being adjusted is actually outstanding and not already paid
• If an appeal with pre-deposit is pending, recovery of the balance demand is stayed, which matters for adjustment
• Ask for the demand ID and order reference if they are not shown

Part B: withholding the refund

A refund can be withheld under Section 54(10) where you have not filed a return or paid tax, interest or penalty that is not stayed. Section 54(11) also allows withholding where an order sanctioning the refund is under appeal and the Commissioner considers that granting it would adversely affect revenue because of malfeasance or fraud. The order should give specific reasons.

Responding to RFD-07

If the ground is non-filing of returns or unpaid dues, the practical remedy is to file the pending return or clear the dues and then request release of the withheld amount in writing.

If you dispute the ground, for instance because the demand was already paid or is stayed, write to the officer with proof. An order under RFD-07 is an appealable decision, so the APL-01 route is open within the normal three-month limit.

Interest and documentation

Interest may be payable on a withheld refund that is later found due, as provided in Section 54(12). Keep a clear record of each RFD-07, the demand it refers to and your replies. A professional can reconcile the electronic liability register and prepare the request for release.

Get it handled for you

Refund stuck or rejected? We rebuild the claim, reply to deficiency memos and follow up with the refund officer in writing. Call or WhatsApp +91 63677 44602, or use the form below.

This guide explains the law in general terms as of October 2026. Time limits and requirements can depend on the facts of your case and on the notice you received.