From 1 November 2026, GST refunds move faster: acknowledgement within 10 days, a system-generated provisional refund order within 3 working days, a statutory 90% provisional refund for inverted duty claims, and removal of the 1.5-times cap on export value. But faster processing does not mean automatic money in the bank. Here is what has changed and what your business should check now.
Exporters, and businesses whose inputs carry a higher GST rate than their outward supplies (the Inverted Duty Structure, or IDS), often have substantial working capital locked in GST refunds. The changes come from two sources: the Finance Act, 2026, which amends Section 54 of the CGST Act, and Notification No. 05/2026-Central Tax dated 26 October 2026 (CGST (Amendment) Rules, 2026), which rewrites the refund procedure in Rules 89 to 92.
At a Glance: What Changed on 1 November 2026
| Point | Before | From 1 November 2026 |
|---|---|---|
| Acknowledgement / deficiency memo (Rule 90) | 15 days | 10 days; deemed acknowledgement if neither is issued |
| Provisional refund order, RFD-04 (Rule 91(2)) | Issued by proper officer within 7 days of acknowledgement | System-generated on risk evaluation within 3 working days; no revalidation by officer |
| Payment order, RFD-05 (Rule 91(3)) | Officer-driven | Made available through the common portal |
| 90% provisional refund for IDS claims | Interim administrative facility for applications filed on or after 1 October 2025 | Statutory, under amended Section 54(6) |
| Input services ITC in IDS refund formula (Rule 89(5)) | Not included | Included, for ITC availed on or after 1 November 2026 |
| 1.5-times cap on zero-rated turnover (Rule 89(4)) | Applied | Omitted |
| ₹1,000 minimum refund (Section 54(14)) | Applied to all refunds | Does not apply to refund of tax paid on goods exported with payment of tax |
Read this before planning cash flow: These timelines govern how fast your application moves, not whether it succeeds. A deemed acknowledgement or an RFD-04 order is not money in the bank. Eligibility conditions, exclusions and system risk evaluation still apply to every claim.
1. Acknowledgement Now Within 10 Days
Under amended Rule 90(2), the department must check the refund application for completeness and issue an acknowledgement in FORM GST RFD-02 within 10 days (earlier 15 days). Under amended Rule 90(3), any deficiency must be communicated in FORM GST RFD-03 within the same 10 days.
What If Neither RFD-02 Nor RFD-03 Is Issued?
The new Rule 90(3A) provides that if neither is communicated within 10 days of filing, the application is deemed to be acknowledged, and the acknowledgement is made available electronically on the GST Portal. In such a case, the time limit under Section 54(7) for deciding the refund is counted from the date of filing of the claim.
Deemed acknowledgement only means the application is treated as complete. It does not mean the claim has been accepted on merits.
Practical step: Mark Day 10 from the filing date in your calendar. On the GST Portal, go to Services > Refunds > Track Application Status and record whether RFD-02, RFD-03 or a deemed acknowledgement appears.
2. Provisional Refund: Now System-Generated in 3 Working Days
Under amended Rule 91(2), the GST common portal, based on system identification and evaluation of risk, generates the provisional refund order in FORM GST RFD-04 within three working days of acknowledgement. This order does not require revalidation by the proper officer. Amended Rule 91(3) also makes the payment order in FORM GST RFD-05 available through the common portal.
Who Does Not Get Provisional Refund?
Under Notification No. 14/2025-Central Tax, from 1 October 2025, provisional refund under Section 54(6) is not available to registered persons who have not undergone Aadhaar authentication, and to suppliers of the specified goods listed in that notification. The non-prosecution condition under Rule 91(1) also continues. Check these first. If your business falls in an excluded category, plan for the full refund timeline, not 3 days.
Will the Refund Reach the Bank in 3 Days?
Not necessarily. RFD-04 is a sanction order. The money reaches you only after the payment order and actual credit. Track each stage separately:
| Stage | What It Means | Is Money Received? |
|---|---|---|
| RFD-01 + ARN | Application filed | No |
| RFD-02 / deemed acknowledgement | Application treated as complete | No |
| RFD-03 | Deficiency memo; fresh application needed | No |
| RFD-04 | Provisional refund sanctioned | Not yet |
| RFD-05 | Payment order issued | On its way |
| RFD-06 | Final sanction or rejection of the full claim | Depends on order |
| Bank credit | Amount actually received | Yes |
3. Inverted Duty Structure: 90% Provisional Refund Now Backed by Law
Since 1 October 2025, as an interim trade-facilitation measure, IDS refund applications were being granted 90% provisional refund pending amendment of the Act. The Finance Act, 2026 has now amended Section 54(6), so provisional refund of up to 90% of an eligible IDS claim (refund of unutilised ITC under Section 54(3)) has statutory backing from 1 November 2026. The exclusions and risk evaluation described above apply here too.
Input Services Now Count, but Only From 1 November 2026
The substituted Rule 89(5) includes eligible input services in "Net ITC" for the IDS refund formula, but only ITC availed on or after 1 November 2026. Earlier input-service credit cannot be added to the computation.
Practical step: From November 2026, keep input-service ITC separately identifiable in your books by the date it is availed (a separate ledger or tag). This will make the refund working easy to prove.
Capital Goods: From 1 April 2027
Attributable capital-goods ITC will enter the IDS refund formula only from 1 April 2027, apportioned over 60 months under the notified formula. Do not include it in claims filed now, but start asset-wise tracking of capital-goods ITC so you are ready.
4. Two More Reliefs for Exporters
The 1.5-Times Cap Is Gone
Under Rule 89(4), the value of zero-rated supply of goods was earlier limited to 1.5 times the value of like goods supplied in India. This cap has been omitted from 1 November 2026. Exporters whose export prices are much higher than domestic prices of similar goods were losing part of their refund because of this cap. For refund periods affected by the cap, recompute the eligible amount under the revised rule.
Small IGST-Paid Export Refunds Below ₹1,000
The Finance Act, 2026 amends Section 54(14), so the ₹1,000 minimum-refund limit no longer applies to refund of tax paid on goods exported out of India with payment of tax. This is a targeted exception. The ₹1,000 limit continues for other refund types, including exports under LUT.
5. What Comes Next: Key Dates
Different parts of Notification No. 05/2026-Central Tax start on different dates. Apply each change only from its own date.
| Date | What Starts |
|---|---|
| 1 November 2026 | Revised Rules 86(3), 89(1), 89(1A), 89(3), 89(4), 89(5), 90, 91 and 92; Finance Act amendments to Section 54(6) and 54(14) |
| 1 December 2026 | Amended Rule 89(2) (supporting documents) and revised FORM GST RFD-01 |
| 1 January 2027 | Certain other provisions of the same notification |
| 1 April 2027 | Capital-goods ITC in the IDS refund formula |
The GST Council, in its 57th meeting held on 8 October 2026, recommended revising RFD-01 to capture details in a system-readable format, so that scanned documents need not be uploaded. If you plan to file a refund in early December, check the revised RFD-01 format before preparing your annexures.
6. A Simple Example
A Kolkata leather-goods exporter exports under LUT and has accumulated ITC. The Accounts Manager files a refund claim of ₹10,00,000 in RFD-01 on 10 November 2026 and an ARN is generated. The owner asks, "Has our refund been approved?" The accountant replies, "Only filed. Approval comes in stages." Here is how the stages would run:
| When | What Happens |
|---|---|
| Day 0 | RFD-01 filed, ARN generated. No money yet. |
| By Day 10 | RFD-02 (acknowledged) or RFD-03 (deficiency). If neither, deemed acknowledgement. |
| Within 3 working days of acknowledgement | If the system risk evaluation clears the claim, RFD-04 sanctions up to ₹9,00,000 (90%) provisionally. |
| After RFD-04 | RFD-05 payment order, then credit to the bank account. Verify the actual credit. |
| Later | The balance ₹1,00,000 is decided in the final order RFD-06, within the time limit under Section 54(7). |
Lesson: An ARN is not a sanction, and an RFD-04 is not a bank credit. Report all three separately to management. (This is a hypothetical example.)
7. Who Should Review These Changes?
- Exporters of goods and services, under LUT or with payment of IGST
- Suppliers to SEZ units and other zero-rated supplies
- Manufacturers and traders with an inverted duty structure
- Businesses with a pending refund application filed around 1 November 2026
- Taxpayers claiming refund of excess balance in the Electronic Cash Ledger, under the revised procedure
8. 5-Minute Self-Check
Ask your Finance Manager to answer YES / NO / NOT SURE. Every NO or NOT SURE is an item to verify, not necessarily a defect.
| Question | Response |
|---|---|
| Have we identified the correct refund category? | |
| Has Aadhaar authentication been completed for our registration? | |
| Have we checked that we are not in an excluded category for provisional refund? | |
| Is the claim matched with GSTR-1 and GSTR-3B? | |
| Is input-service ITC from 1 November 2026 tagged separately in our books? | |
| For exports, have we recomputed the refund without the 1.5-times cap where it applies? | |
| Are the RFD-01 filing date and ARN recorded? | |
| Have we checked RFD-02 / RFD-03 / deemed acknowledgement status after Day 10? | |
| Have RFD-04, RFD-05 and RFD-06 been downloaded and filed? | |
| Have sanctioned amounts been matched with actual bank credits? | |
| Is one person responsible for the next action on each pending refund? |
9. Documents to Keep Ready
| Document | Needed For |
|---|---|
| RFD-01, ARN and filing date | All refunds |
| GSTR-1, GSTR-3B and reconciliation | All refunds |
| Export invoices, shipping bills, EGM details, foreign inward remittance evidence, LUT | Export / zero-rated refunds, as applicable |
| Input, input-service (with availment date) and ledger reconciliation | ITC-based refunds, especially IDS |
| RFD-02, RFD-03, RFD-04, RFD-05, RFD-06 | Proof of actual status |
| Bank statement showing refund credit | Proof of actual receipt |
| Management summary: claimed, acknowledged, sanctioned, paid, pending | Working-capital planning (good practice) |
10. Frequently Asked Questions
Will my refund reach the bank within 3 days?
No. The 3 working days apply to the system-generated RFD-04 provisional sanction after acknowledgement, and only if the claim clears risk evaluation. Payment order and bank credit come after that.
Does deemed acknowledgement mean my refund is accepted?
No. It only means the application is treated as complete. The claim is still examined on merits.
Is 90% provisional refund automatic for inverted duty claims?
No. It is available up to 90%, subject to system risk evaluation, Aadhaar authentication, the specified-goods exclusion and the other conditions of Section 54(6) and Rule 91.
Can I add old input-service ITC to my IDS refund?
No. Only input-service ITC availed on or after 1 November 2026 counts. Capital-goods ITC counts only from 1 April 2027.
Has the ₹1,000 minimum refund limit been removed for all refunds?
No. It has been removed only for refund of tax paid on goods exported with payment of tax. It continues for other refunds, including exports under LUT.
What changes on 1 December 2026?
The amended Rule 89(2) on supporting documents and the revised FORM GST RFD-01 come into force. Check the new form before filing.
11. Legal References
- Notification No. 05/2026-Central Tax dated 26 October 2026, G.S.R. 919(E), issued under Section 164 of the CGST Act: Central Goods and Services Tax (Amendment) Rules, 2026. Amends Rules 86(3), 89, 90, 91 and 92, among others. General commencement 1 November 2026, with specified provisions from 1 December 2026, 1 January 2027 and 1 April 2027.
- Finance Act, 2026, Section 155 (enacted 30 March 2026): amends Section 54(6) (provisional refund for IDS claims) and Section 54(14) (₹1,000 limit exception for goods exported with payment of tax).
- Notification No. 03/2026-Central Tax dated 26 October 2026: appoints 1 November 2026 as the commencement date for Sections 153 to 155 of the Finance Act, 2026.
- Notification No. 14/2025-Central Tax dated 17 September 2025: categories of registered persons not eligible for provisional refund, from 1 October 2025.
- CBIC Circulars No. 257 to 266 of 2026: companion field guidance on the amended rules.
This article explains the law as on 5 November 2026 for general information. Please read the notified text and examine your own facts before acting on any refund claim.
One Small Step for Today
Ask your Accounts Manager to pick one pending GST refund and tell you its latest verified stage: Filed, Acknowledged, Deficiency Memo, Provisional Sanction, Payment Order, Final Sanction or Bank Credit.
Need Help With a Pending or Upcoming Refund?
Our GST Refund Readiness & Reconciliation Health Check covers:
- Correct refund category and eligibility, including provisional-refund exclusions
- Recomputation under the revised Rule 89, including removal of the 1.5-times cap and input-service ITC
- Reconciliation of returns, ITC ledger, refund orders and bank credits
- A clear action plan for each pending refund
We identify genuine issues and fix them early. We do not promise sanction or payment within a particular period.
Email: support@gstdost.com | Phone: +91 90 8888 2000
GST DOST | GST Refund, Reconciliation & Professional Advisory
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