CBIC Introduces Risk-Based System for 90% Provisional GST Refunds

Instruction No. 06/2025 – GST, Dated 03-10-2025

1. Introduction

The Central Board of Indirect Taxes and Customs (CBIC) has issued a new set of instructions to streamline the processing of refund applications filed under the Goods and Services Tax (GST) regime. These directions primarily cover refunds arising from zero-rated supplies (such as exports) and those related to the Inverted Duty Structure (IDS). The objective of these guidelines is to accelerate refund disbursals for genuine taxpayers while ensuring adequate safeguards against fraudulent claims.

2. Provisional Sanction of 90% Refunds for Zero-Rated Supplies

One of the key measures announced by the CBIC is the provisional sanction of up to 90% of the claimed refund amount for zero-rated supplies. This provisional refund mechanism will be contingent upon the system-generated risk score assigned to each application. By allowing faster disbursal to eligible taxpayers, the Board aims to ease liquidity pressures faced by exporters and ensure timely refund of accumulated Input Tax Credit (ITC).

3. Risk-Based Classification of Refund Applications

The CBIC has emphasized the importance of using a risk-based classification system in processing refund applications. Refund claims that are categorized as “low-risk” based on automated system parameters may be sanctioned promptly on a provisional basis. This approach is expected to enhance efficiency, reduce manual intervention, and ensure that refunds are granted swiftly to compliant and trusted taxpayers while high-risk cases continue to undergo detailed scrutiny.

4. Judicious Application of Rule 91(2)

In addition, the CBIC has clarified that the recent amendment to Rule 91(2) of the CGST Rules should be implemented judiciously and on a case-by-case basis. Tax officers have been instructed to exercise discretion and avoid withholding provisional refunds on presumptive or general grounds. This ensures that genuine taxpayers are not subjected to unnecessary procedural delays and that only those cases with substantial risk factors face extended examination.

5. Conclusion

In conclusion, the CBIC’s latest instructions mark a progressive step towards improving the efficiency, transparency, and fairness of GST refund processing. The introduction of a risk-based evaluation model, coupled with provisional sanctioning, is expected to expedite refunds for exporters and manufacturers operating under the inverted duty structure. By striking a balance between revenue protection and taxpayer facilitation, the Board aims to strengthen trust, compliance, and the overall ease of doing business under India’s GST framework.

Click Here To Read The Full Update