GST Refunds, Faster and Simpler: Every Change from the 57th GST Council, Before vs After
GST refunds made easier and faster: 57th GST Council recommends 90% provisional refund, 10-day acknowledgement, capital goods ITC. Before vs after – Hyderabad.
It is the oldest complaint in GST: the money is yours, the claim is filed, and the status says “pending for deficiency”. For an exporter in Gachibowli or a manufacturer with inverted duty near Nanakramguda, a stuck refund is working capital held up for weeks. The 57th GST Council meeting aimed at two things: ease (less paperwork, fewer manual steps) and speed (shorter timelines, quicker money).
The short answer: After its 57th meeting on 8 October 2026, the GST Council recommended a system-based GST refund process built for ease and speed. Phase 1 would sanction the full excess balance in the electronic cash ledger automatically, cut the acknowledgement/deficiency-memo time from 15 to 10 days with deemed acknowledgement, and provisionally sanction 90% of zero-rated and inverted-duty claims on system risk evaluation. Phase 2 would automate acknowledgement and full sanction of zero-rated claims after adjusting pending dues. These are recommendations as per the press release; the statutory amendments, notifications and circulars are awaited.
What changes in GST refund after the 57th GST Council meeting?
The recommended changes amend section 54 of the CGST Act and the CGST Rules, and work in two phases.
| Phase | Recommended change |
|---|---|
| Phase 1 | Full refund of excess electronic cash ledger balance sanctioned automatically |
| Phase 1 | Acknowledgement / deficiency memo time reduced from 15 to 10 days; deemed acknowledgement if neither is issued |
| Phase 1 | 90% of zero-rated supply and inverted duty structure (IDS) claims provisionally sanctioned automatically, based on system risk evaluation |
| Phase 2 | Automated acknowledgement after system verification |
| Phase 2 | For zero-rated claims, full sanction automated after adjusting pending dues, based on risk evaluation |
What makes GST refunds easier and faster?
| Ease | Speed |
|---|---|
| RFD-01 becomes system-readable; no scanned documents for zero-rated and IDS claims | Acknowledgement / deficiency memo window cut from 15 to 10 days, with deemed acknowledgement |
| Rule 89(4)(C) cap removed | 90% of zero-rated and IDS claims provisionally sanctioned automatically |
| Automated acknowledgement after system verification (Phase 2) | Full refund of excess cash ledger balance sanctioned automatically |
How much faster this will be in practice depends on the final rules and the portal, which are awaited.
What else changes in refund law and procedure?
- FORM GST RFD-01 becomes system-readable, with no scanned documents required for zero-rated and IDS claims.
- The rule 89(4)(C) cap is removed. This is the limit that restricts the turnover of zero-rated goods to 1.5 times the value of like goods supplied domestically.
- Section 54(14) explanation: the ₹1,000 threshold applies to the total refund across CGST, SGST/UTGST and IGST taken together.
- Section 115: to be made a standalone provision for interest on refund of pre-deposit, with a clarifying circular.
- Capital goods and input services: see the next section.
Will accumulated ITC on capital goods and input services become refundable?
Yes, on the recommendation, with dates:
| Category | Recommendation | Applies to ITC availed |
|---|---|---|
| Inverted duty (IDS) | Refund of accumulated ITC on input services | On or after 1 November 2026 |
| IDS and zero-rated | Refund of accumulated ITC on capital goods, spread over 60 months | On or after 1 April 2027 |
These need amendment of the proviso to section 54(3)(ii) and the Rules. Until then, the existing position continues (confirm the existing limits against the current section 54(3) and rule 89).
GST refund: before and after (as per press release)
| Aspect | Existing position (confirm) | Recommended by the Council |
|---|---|---|
| Acknowledgement / deficiency memo | 15 days | 10 days; deemed acknowledgement |
| Excess cash ledger balance | Claimed and processed on application | Full refund sanctioned automatically |
| Zero-rated claims | Provisional refund and manual processing | 90% provisional automatic sanction; Phase 2 full automated sanction after adjusting dues |
| Inverted duty claims | Manual processing | 90% provisional automatic sanction on risk evaluation |
| ITC covered in IDS refund | Inputs (goods) only | Input services (ITC availed from 1 Nov 2026) and capital goods (from 1 Apr 2027, over 60 months) |
| ITC on capital goods in zero-rated refund | Not covered | Covered, over 60 months (from 1 Apr 2027) |
| RFD-01 documents | Supporting documents uploaded | System-readable; no scanned documents for zero-rated and IDS claims |
| Rule 89(4)(C) cap | 1.5 times value of like goods supplied domestically | Removed |
| Refund threshold | ₹1,000 | ₹1,000 across CGST, SGST/UTGST and IGST combined (explanation to s.54(14)) |
| Interest on pre-deposit refund | Provision in section 115 | Standalone provision plus clarifying circular |
What should exporters and manufacturers in Hyderabad do now?
For software-services exporters in Kondapur and Gachibowli, SEZ units in Nanakramguda and manufacturers claiming inverted-duty refunds:
- Keep filing refund claims under the existing process. Nothing in the recommendations is operative yet.
- Reconcile GSTR-1, GSTR-3B, GSTR-2B and shipping bills / BRCs / FIRCs so the claim passes automated risk checks.
- Segregate ITC on input services and capital goods by month of availment, since eligibility will turn on the date (1 November 2026 and 1 April 2027).
- Clear pending dues and notices: Phase 2 sanction is after adjustment of pending dues.
- Wait for the circulars before changing documentation practice.
CA in Kondapur & Gachibowli: how can we help with refund claims?
Refund claims are won or lost on reconciliation and documentation, and, when rejected, on the appeal. ComplianceKart serves businesses in Kondapur, Gachibowli, Hitech City and Nanakramguda with refund filing, deficiency replies and appeals.
Why work with a multi-disciplinary practice?
Think of a multi-speciality hospital: the diagnosis, the procedure and the follow-up sit in one building. ComplianceKart is a boutique practice with Chartered Accountants, Company Secretaries and advocates under one roof, so the claim, the reconciliation and a rejection appeal stay with one team. Call or WhatsApp 9959536391 or write to team@compliancekart.com. [Link: GST refund service page]
FAQs
What did the 57th GST Council recommend on GST refund?
System-based refund processing in two phases, covering automatic sanction of excess cash ledger balance, 90% provisional sanction for zero-rated and inverted-duty claims, a 10-day acknowledgement window and system-readable RFD-01.
Is the new GST refund process in force?
No. These are recommendations; amendments to section 54 and the Rules, notifications and circulars are awaited.
From when will accumulated ITC on input services be refundable under inverted duty?
The Council recommended it for ITC availed on or after 1 November 2026, subject to amendment.
Will capital goods ITC be refundable?
Recommended for zero-rated and inverted duty cases, spread over 60 months, for ITC availed on or after 1 April 2027.
Is the 1.5 times rule for zero-rated goods going away?
The Council recommended removing the rule 89(4)(C) cap, subject to amendment of the Rules.
Does the ₹1,000 refund threshold change?
The amount stays; the explanation to section 54(14) clarifies that it applies to the total across CGST, SGST/UTGST and IGST.
Disclaimer
This article is based on the press release and reports of the 57th GST Council meeting held on 8 October 2026. The recommendations take legal effect only through amendments to the CGST Act and Rules, notifications and circulars, which are awaited. Please do not act on them until notified. This is general information and not legal advice.
Sources
TaxGuru summary of the PIB release and CAclubindia report of the 57th GST Council meeting (8 October 2026). Official PIB release and Council minutes not directly read at the time of writing.
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