The upcoming Finance Bill 2026 is expected to introduce a set of amendments to the Goods and Services Tax (GST) law) aimed at simplifying compliance and improving liquidity for businesses. Among the measures are provisions for fast-track GST registration, automatic 90 percent refund under the inverted duty structure (IDS), and other procedural simplifications, government sources said.
“These will form part of the law changes proposed for inclusion in the upcoming Budget,” a senior government official said, adding that the amendments are currently being finalised. “The focus is on faster registration and quicker refund settlement. A proposal for 90 percent provisional refund under the inverted duty structure will also be included,” the official told Moneycontrol.
Fast-track GST registration
The risk-based fast-track registration mechanism for low-risk taxpayers, enables new GST registrations to be approved within three working days after Aadhaar or PAN verification. The aim is to curb delays while ensuring stricter scrutiny for high-risk applicants using data analytics. It came into effect from November 1, 2025, but the law amendment needed for it is pending.
Officials said the move aligns with the government’s broader push toward faceless, technology-driven processes, reducing manual intervention and discretion at field levels. “The system will automatically verify applications based on pre-defined risk parameters, cutting approval time and easing business entry,” the official said.
The auto-approval mechanism for taxpayers with verified credentials is part of the broader compliance simplification roadmap for GST 2.0.
90 percent refund
A major reform expected in the Finance Bill is the automatic 90 percent refund mechanism for input tax credit.
Under the framework, taxpayers receive 90 percent of their refund claims automatically, subject to basic system-based checks, while the remaining 10 percent will be processed after due verification.
“The 90 percent of the claim is sanctioned upfront on a risk-assessed basis. It will ease working capital pressures, especially in sectors like textiles, footwear, and fertilisers,” he said.
The move comes amid long-standing industry concerns over delays in processing refunds under the IDS, which often lock up input tax credits and strain cash flows. By enabling upfront refunds, the government aims to boost liquidity for manufacturers and exporters.
The amendments are expected to be placed before Parliament as part of the Finance Bill 2026.
The inverted duty structure issue has been a recurring concern for several sectors. In the past, industries such as textiles and footwear have sought either rate rationalisation or automatic refunds to prevent the accumulation of unused input tax credits.
The new refund mechanism has been implemented from November but needs legal amendment.
Inverted duty structure
An inverted duty structure (IDS) arises when the tax rate on inputs is higher than the rate on output supplies, leading to excess input tax credit accumulation. Currently, such credits are refundable only after manual verification, which causes long delays. The proposed change would automate this process, with most refunds being processed systemically based on risk ratings.
These proposals are part of the GST 2.0. The planned law changes in the Finance Bill 2026 are therefore seen as the legislative step paving the way for a more automated, trust-based compliance ecosystem.
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