Faster GST Refunds With Fewer Documents: What Will Change in RFD-01

Refund claims filed in Form GST RFD-01 for zero-rated supplies and inverted duty structure will move to system-based processing under reforms the 57th Goods and Services Tax (GST) Council recommended on 8 October 2026. Officers will get 10 days instead of 15 to acknowledge a claim or point out deficiencies.

After that, the claim is treated as acknowledged. For low-risk claims, the system itself will sanction 90% of the amount on a provisional basis, and RFD-01 will capture data in fields the system can read, so these claims will no longer need scanned document uploads.

These are recommendations. They take effect only after Section 54 of the Central Goods and Services Tax (CGST) Act, 2017 and the CGST Rules are amended and the dates are notified. Until then, the current process applies.

How will risk-based automation work for refund claims?

The existing law provides for provisional refunds of up to 90% of eligible claims for zero-rated supplies under Section 54(6) of the CGST Act. From 1 October 2025, amended Rule 91(2) allows the proper officer to sanction provisional refunds based on the system’s risk evaluation. CBIC Instruction No. 06/2025-GST extended the same 90% provisional refund mechanism to inverted duty structure claims as an interim measure, pending the required amendment to Section 54(6).

The proposed change is who sanctions the provisional refund. Currently, the proper officer issues Form GST RFD-04 within seven days of acknowledgement. Under Phase 1 of the Council’s recommendation, the system would automatically sanction 90% of eligible claims identified as low-risk, without officer intervention. The officer would still handle final scrutiny.

The GST Council has recommended a two-phase rollout for automated GST refund processing:

The Council has not publicly specified the complete risk-scoring parameters. Claims not selected for automated processing go to the proper officer for scrutiny. Under the applicable provisional refund provisions, an officer may also undertake detailed scrutiny instead of granting provisional sanction in exceptional cases, recording the reasons in writing.

These changes are recommendations and require the relevant legal amendments and rule changes to take effect.

Which refund claims are eligible for automated processing?

The automated route covers three types of refunds filed in RFD-01:

• Excess balance in the electronic cash ledger, refunded in full by the system.
• Zero-rated supplies, which means exports of goods or services and supplies to a Special Economic Zone (SEZ) unit or developer. This includes exports under a Letter of Undertaking (LUT) where you claim accumulated Input Tax Credit (ITC).
• Inverted duty structure, where the GST rate on your inputs is higher than the rate on your output, and ITC piles up.

Integrated Goods and Services Tax (IGST) paid on exported goods, with payment of tax, follows a separate track. That refund is processed through the shipping bill on ICEGATE and does not use RFD-01.

Some applicants will not get a provisional refund even if their claim is low-risk. Notification No. 14/2025-Central Tax excludes certain notified persons, and the CBIC instruction also excludes these cases:

• The applicant does not meet the non-prosecution condition under Rule 91(1).
• An appeal on the same issue from an earlier refund claim is pending.
• A show cause notice has been issued, or an order has not yet attained finality.

The scope of inverted duty refunds will also widen. ITC on input services availed on or after 1 November 2026 will count. ITC on capital goods availed on or after 1 April 2027 will count for both zero-rated and inverted duty refunds, spread over 60 months. The Council has also recommended removing the cap in Rule 89(4)(C) that limits export turnover of goods to 1.5 times the value of similar goods sold in India.

What does the 10-day acknowledgement window mean for you?

After you file RFD-01, the proper officer has to do one of two things. The officer either issues an acknowledgement in Form GST RFD-02, confirming the application is complete, or issues a deficiency memo in Form GST RFD-03 listing what is missing. Rule 90 currently allows 15 days. Phase 1 cuts it to 10 days. If the officer does neither within 10 days, the system will treat the application as acknowledged.

The date of acknowledgement matters for two reasons:

• The seven-day window for the provisional order under Rule 91(2) starts from the date of acknowledgement.
• Section 54(7) requires the final order within 60 days of receiving a complete application. If the refund is paid later, Section 56 makes interest payable to you for the delay.

A shorter window means a stalled claim can no longer sit unacknowledged for weeks. However, it does not guarantee a clean claim. If the officer issues a deficiency memo within 10 days, you have to file a fresh RFD-01 for the same period after fixing the gaps. A fresh claim must meet the applicable limitation period. However, Rule 90(3) excludes the period between filing the original RFD-01 and communication of the RFD-03 deficiency memo when calculating the two-year limit for the corrected claim. Rectify and refile promptly rather than assuming that a fresh two-year period begins. Any ITC or cash debited when you filed the first application is credited back.

In Phase 2, the officer step will be automated. The system will acknowledge the application on its own once it has verified the data.

How is acknowledgement different from refund payment?

An acknowledgement confirms only that your application is complete. It does not mean the department has approved the amount, so no money reaches your bank account at this stage. A deemed acknowledgement works the same way. It starts the clock but releases nothing.

The table below shows where money actually moves:

The payment order in Form GST RFD-05 is what sends the money. It is credited to the bank account you validated on the GST portal, so an unvalidated or mismatched bank account can hold up a sanctioned refund. The provisional 90% is also not final. If the final amount turns out lower, the officer issues a show cause notice in Form GST RFD-08 to recover the excess.

Which documents will you no longer need to upload?

For zero-rated and inverted duty claims, you will no longer upload scanned documents with RFD-01. The form will capture the same details in fields the system can read and match. Today, a typical claim carries PDF uploads such as these:

• Statements 2 to 5 for exports and SEZ supplies, with invoice, shipping bill or bill of export details
• Statement 1 with the inverted duty refund calculation
• A statement of invoices on which ITC was availed, often called Annexure-B
• Proof of realisation of export proceeds for services, such as a Bank Realisation Certificate (BRC) or Foreign Inward Remittance Certificate (FIRC)
• Declarations and undertakings required under Rule 89(2)

The Council’s release does not list each statement or declaration that will be dropped. Check the revised form once it is notified.

Fewer uploads do not mean fewer checks. The system will compare what you enter in RFD-01 with your GSTR-1, GSTR-3B and GSTR-2B, and for exports, with shipping bill data from ICEGATE and realisation data. Any mismatch will surface at the system stage, before an officer looks at the claim. You also need to keep the original invoices, shipping bills and BRC or FIRC on record, because Section 36 requires you to retain books and records for 72 months from the due date of the annual return for that year.

What can still delay or reduce your refund?

Automation speeds up clean claims. These problems can still push a claim out of the fast track or cut the amount:

• Mismatched data between RFD-01 and your returns, such as export invoices in GSTR-1 that do not match shipping bills
• A risk score above the low-risk band, which sends the claim for manual scrutiny with no automatic 90%
• Pending tax dues, which can be adjusted against the refund under Section 54(10) and, in Phase 2, before the system sanctions the full zero-rated refund
• Export proceeds for services not received in convertible foreign exchange or Indian rupees where permitted by the Reserve Bank of India (RBI)
• A bank account that is not validated on the GST portal
• An earlier refund dispute on the same issue still pending in appeal

What should businesses do before the changes take effect?

The changes require amendments to the CGST Act and Rules, so continue filing under the current provisions until the relevant amendments and notifications take effect. Use this time to reconcile records and prepare for the proposed changes:

1. Reconcile GSTR-1, GSTR-3B and GSTR-2B every month.
2. Match export invoices reported in GSTR-1 with shipping bills and resolve any ICEGATE data mismatches.
3. Track realisation of export proceeds against each export of services invoice and retain supporting documents.
4. Validate your bank account on the GST portal to avoid refund processing issues.
5. Review pending demands and resolve or contest them as appropriate, since outstanding dues may be adjusted against eligible refunds under applicable provisions.
6. Track ITC on input services separately for potential inverted duty structure refunds from 1 November 2026 and ITC on capital goods from 1 April 2027, subject to the proposed amendments taking effect.

Conclusion

Once these changes are notified, your refund speed will depend mostly on the data you enter in RFD-01 and your returns. A low-risk claim with clean, matching data can move from filing to a 90% credit without waiting on an officer. A claim with gaps will still land on an officer’s desk, and the 10-day deemed acknowledgement will not change that. Treat acknowledgement as the start of the process and the RFD-05 payment order as the point the money moves.

If you maintain your books in TallyPrime, you can reconcile GSTR-2B and file GSTR-1 and GSTR-3B from the same data. This helps catch mismatches before they reach the refund system.