The Union Government is set to unveil a series of landmark amendments to the Goods and Services Tax (GST) framework through the upcoming Finance Bill, 2026, aimed at simplifying compliance procedures and enhancing liquidity for businesses across sectors.
According to senior government officials, the proposed legislative changes—currently in the final stages of drafting—will include provisions for risk-based fast-track GST registration, an automatic 90% provisional refund mechanism under the Inverted Duty Structure (IDS), and a host of other procedural simplifications to support the government’s “GST 2.0” vision.
Fast-Track GST Registration
One of the key reforms under consideration is the fast-track registration system for low-risk taxpayers, which promises to drastically cut approval timelines.
Under this mechanism, new GST registrations for applicants deemed low-risk will be approved within three working days following Aadhaar or PAN-based verification. The automated system relies on data analytics and predefined risk parameters to identify low-risk applicants, ensuring that genuine businesses can commence operations swiftly while maintaining tighter scrutiny for high-risk profiles.
Though the system was operationalised from November 1, 2025, it currently functions under administrative instructions and awaits the corresponding statutory amendment to give it full legal effect.
Officials noted that this initiative aligns with the government’s larger push for faceless, technology-driven processes, minimising manual intervention and discretion at the field level.
“The system will auto-verify credentials and grant registration approvals in a time-bound manner. It’s designed to remove bureaucratic hurdles and enhance the ease of doing business,” the official added.
90% Automatic Refund Under Inverted Duty Structure
Perhaps the most impactful reform in the pipeline is the proposal for an automatic 90% provisional refund for taxpayers facing credit accumulation under the Inverted Duty Structure (IDS).
Currently, refund claims under the IDS—where the tax rate on inputs exceeds that on outputs—are processed manually, leading to significant delays and working capital blockages, particularly for sectors like textiles, footwear, and fertilisers.
The new system proposes to sanction 90% of refund claims automatically, based on system-driven checks and risk assessments, while the remaining 10% will be disbursed post-verification.
“This reform will be a game-changer for manufacturing and export-oriented sectors. By releasing 90% of eligible refunds upfront, the measure will alleviate cash flow challenges and improve business liquidity,” an official explained.
The automatic refund mechanism has already been rolled out in phases since November 2025, pending formal legislative backing through the upcoming Finance Bill.
Addressing the Inverted Duty Structure Challenge
The inverted duty structure has long been a sticking point in India’s GST regime. When input tax rates exceed output tax rates, businesses accumulate unutilised input tax credits (ITC), tying up substantial working capital.
Industry associations have consistently sought either rate rationalisation or automatic refunds to address the recurring issue of ITC accumulation. The new refund framework represents a systemic shift—moving from manual verification to automated, risk-based processing, which promises faster settlements and reduced litigation.
Towards GST 2.0: A Trust-Based Compliance Ecosystem
The reforms proposed in the Finance Bill 2026 are expected to pave the way for GST 2.0, a modernised tax regime built around automation, transparency, and trust.
Officials said that the upcoming legal amendments would institutionalise several initiatives that have already been implemented through administrative mechanisms, including risk-based registration, automated refund processing, and digital compliance verification.
Once enacted, these measures are expected to significantly enhance ease of doing business, reduce compliance costs, and strengthen taxpayer confidence in the GST framework.
“The focus is on creating a seamless compliance experience—where technology does the heavy lifting, and honest taxpayers are rewarded with faster processes and fewer touchpoints,” the official said.
The Finance Bill 2026, likely to be presented in the Union Budget, will therefore mark a crucial legislative milestone in India’s ongoing tax reform journey—cementing the transition to a more automated, efficient, and trust-based GST ecosystem.
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