Answer

1. F

   Facts

   Yes. Refund of unutilised ITC on exports is based on your credit, so credit from risky suppliers directly affects refunds. Refunds are now processed with risk assessment, and doubtful credit can hold up or reduce your claim.

2. P

   Provisions and law

   • Sec 16(2)(c), CGST Act 2017ITC is allowed only if the tax charged has actually been paid to the Government by the supplier
   • Sec 54(3), CGST Act 2017Refund of unutilised ITC is allowed on zero-rated supplies made without payment of tax
   • Rule 86A, CGST Rules 2017Officer may block credit in the electronic credit ledger where it was availed on invoices from non-existent suppliers or without receipt of goods
3. A

   Analysis

   From 1 October 2025, provisional refunds are given on system risk assessment; high-risk claims can be withheld. Credit from cancelled or non-filing suppliers in your Annexure B invites a deficiency memo or show cause. Example: an exporter claiming Rs 20 lakh refund finds Rs 2 lakh credit from a supplier cancelled from inception; it should be excluded or fully supported before filing.

4. C

   Conclusion

   1. 1Check every supplier in your refund period's purchase list on the portal
   2. 2Exclude or separately support credit from cancelled or non-filing suppliers
   3. 3Keep transport and payment proof for high-value purchases
   4. 4File the refund only after this review

General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.