GST Council Introduces Major Changes to Facilitate Refund Rules, Effective from November 1, 2025

In the speech of the 79th Independence Day (August 15, 2025), Prime Minister Shri Narendra Modi spoke to bring next-generation GST reforms across the nation, aimed at ease of living for the common man and strengthening the economy. Keeping this statement in mind, the Union Government prepared a detailed list of proposals for broad-based GST rate rationalisation and process reforms.

Recently, the 56th GST council meeting scheduled for September 3 and 4, 2025 (already held for September 3, and for September 4 is going on), has approved the proposed List of Next Generation GST Reforms of the Union Govt. These GST reforms will ease the lives of Indian citizens and will ease the establishment of businesses in the country, especially for small traders and businesses.

Among the proposed recommendations, some of them are as follows:

1. Risk-Based Provisional Refund for Zero-Rated Supplies

The Council has approved an amendment to Rule 91(2) of the CGST Rules, 2017. Under this, exporters and suppliers making zero-rated supplies (exports of goods or services, or supplies to Special Economic Zone developers/units for authorised operations) will now get 90% of their refund on a provisional basis.

This refund will be released by the system automatically after assessing the level of risk. However, in exceptional cases, if the proper officer feels that a detailed scrutiny is necessary, they may withhold the provisional refund and record the reasons in writing.

Additionally, a notification will be issued to specify certain categories of taxpayers who will not be eligible for provisional refunds. This new system will take effect from November 1, 2025.

2. Provisional Refund for Inverted Duty Structure (IDS)

In the list of proposals, it was also recommended to extend the provisional refunds to cases arising from Inverted Duty Structure (IDS), where the tax paid on inputs is higher than the tax on outputs.

To implement this recommendation, an amendment will be introduced to Section 54(6) of the CGST Act, 2017, to provide for the sanction of 90% of the refund claimed on a provisional basis, in cases arising out of IDS, on similar lines as is presently available for refund in respect of zero-rated supply.

The Central Board of Indirect Taxes and Customs (CBIC) will issue guidelines to tax officers to start giving provisional refunds of 90% in IDS cases, until the law is formally amended. This recommendation will also be made effective from November 1, 2025.

3. Refunds for Low-Value Export Consignments

Currently, a certain threshold limit has been set under Section 54(14) of the CGST Act, 2017, on the exporters claiming refunds of tax paid on exports. In the proposed recommendations, it was suggested to remove this threshold limit altogether.

Once this amendment is successfully implemented, exporters of low-value consignments, including those sending goods through couriers, post, or similar modes, will also be able to claim refunds without any restrictions. This step will provide relief to small exporters, who frequently ship products in smaller quantities via the aforementioned modes.