The Central Board of Indirect Taxes and Customs (CBIC) has rolled out an important update to simplify the Goods and Services Tax (GST) refund process. As per Instruction No. 06/2025-GST, issued on October 3, 2025, a new risk-based system for provisional GST refunds will take effect from October 1, 2025.
This move is expected to make refund processing quicker, more transparent, and less stressful for honest taxpayers across India.
What’s Changing Under the New Refund System
The upcoming framework introduces several key improvements designed to make the refund process smoother and more efficient. Here’s what taxpayers and businesses need to know:
- 90% Refund for Low-Risk Applicants:
Businesses classified as low-risk by the system will receive 90% of their refund provisionally, without waiting for detailed scrutiny. - Who Can Benefit:
The new system applies to:- Zero-rated supply refunds (such as exports).
- Inverted Duty Structure (IDS) refunds, where the input tax rate is higher than the output tax rate.
- Refund Withholding Only in Specific Cases:
Refunds can be withheld only on a case-by-case basis and must be supported by a written explanation from the authorities. - Inverted Duty Structure Refunds Included:
IDS claims will follow the same streamlined process once the required legislative amendments are finalized.
Why This Change Matters
This initiative follows the 56th GST Council’s recommendation and is supported by both CBIC and GSTN. It’s a big step toward a more technology-driven and transparent GST administration.
By using automated risk assessment, the government aims to:
- Speed up refunds for genuine taxpayers.
- Free up working capital for exporters and manufacturers.
- Reduce administrative delays.
- Keep a close check on fraudulent or high-risk cases.
How Businesses Can Prepare
For compliant taxpayers, this reform means faster refunds and fewer hassles. Exporters and businesses that often experience refund delays will likely see the most benefit.
To make the most of the new system, ensure your business:
- Files GST returns on time,
- Maintains accurate documentation, and
- Keeps transaction reporting consistent and transparent.
These steps will help your profile qualify as low-risk and allow you to enjoy the benefits of quicker refunds.
In Summary
The launch of Risk-Based Provisional GST Refunds marks an important milestone in India’s tax reform journey. Starting October 1, 2025, businesses that maintain clean and compliant GST practices can expect faster refund approvals and smoother cash flow.
Now is the right time to review your GST compliance and prepare your business to take advantage of this simplified refund process.