GST Refund Rules From 1 November 2026: 10-Day Acknowledgement, Portal Provisional Refund and New Inverted Duty Formula (Notification 05/2026-Central Tax)
Quick Summary
- The GST refund rules change from 1 November 2026 under the Central Goods and Services Tax (Amendment) Rules, 2026 (Notification No. 05/2026-Central Tax, 26 October 2026) and sections 153 to 155 of the Finance Act 2026, brought into force from the same date by Notification No. 03/2026-Central Tax.
- The proper officer must now acknowledge a refund application, or point out deficiencies, within 10 days instead of 15. If neither happens, the application is deemed acknowledged and the 60-day clock under section 54(7) runs from the date of filing.
- The provisional refund order in FORM GST RFD-04 is now generated by the common portal on system risk evaluation within three working days of acknowledgement.
- Provisional refund of 90% under section 54(6) is extended to inverted duty structure refunds, and the inverted duty formula in rule 89(5) is rewritten to count ITC on eligible input services.
- For exporters, the “1.5 times domestic value” cap on zero-rated turnover in rule 89(4)(C) is omitted, and the Rs 1,000 minimum refund bar no longer applies to refunds of tax paid on goods exported with payment of tax.
The GST refund rules for November 2026 mark the largest change to the refund process since the CGST Rules were framed. Two instruments do the work. Notification No. 03/2026-Central Tax, dated 26 October 2026, appoints 1 November 2026 as the date on which sections 153 to 155 of the Finance Act 2026 come into force; section 155 amends section 54 of the CGST Act. Notification No. 05/2026-Central Tax, dated 26 October 2026, made “on the recommendations of the Council”, amends rules 89 to 92 of the CGST Rules, 2017. Most of the refund changes apply from 1 November 2026; a few apply from 1 December 2026 and 1 April 2027, and this note gives the date for each.
What changes in the GST refund rules from 1 November 2026?
1. Ten-day acknowledgement and deemed acknowledgement (rule 90)
Until now, rule 90(2) gave the proper officer fifteen days from filing to scrutinise a refund application (other than a claim from the electronic cash ledger) for completeness and issue the acknowledgement in FORM GST RFD-02. The amended rule 90(2) substitutes “ten” for “fifteen”. Rule 90(3) now also requires any deficiency memo in FORM GST RFD-03 to be issued “within a period of ten days of filing of the said application”.
The new rule 90(3A) closes the gap where neither happens:
“Where neither an acknowledgement has been made available in FORM GST RFD-02 nor the deficiencies have been communicated in FORM GST RFD-03 by the proper officer to the applicant within a period of ten days of filing of the refund application, such application shall be deemed to have been acknowledged … and the time period specified in sub-section (7) of section 54 shall be counted from such date of filing.”
Section 54(7) requires the final refund order within sixty days from receipt of a complete application. Under rule 90(3A), that period now runs from the date of filing once the ten days pass without an acknowledgement or a deficiency memo.
2. Provisional refund generated by the common portal in three working days (rule 91)
Rule 91(2), as it stood from 1 October 2025, required the proper officer, on the basis of system risk evaluation, to make the provisional refund order in FORM GST RFD-04 within seven days of acknowledgement, with a proviso allowing the officer, for reasons recorded in writing, not to grant a provisional refund. The substituted rule 91(2) reads:
“The common portal, on the basis of identification and evaluation of risk by the system, shall generate an order in FORM GST RFD-04 within a period of three working days from the date of the acknowledgement under sub-rule (1A) or (2) or (3A), of rule 90: Provided that the order issued in FORM GST RFD-04 shall not be required to be revalidated by the proper officer.”
The substituted sub-rule does not carry the earlier proviso that let the officer decline a provisional refund with recorded reasons. Rule 91(3) is also amended so that the payment order in FORM GST RFD-05 “may be made available through the common portal”. The condition in rule 91(1) is unchanged: provisional refund is not available to a person prosecuted, in the five years before the tax period of the claim, for an offence where the tax evaded exceeds Rs 250 lakh.
3. Portal-generated final orders (rule 92)
A new rule 92(1B) provides that where a refund under section 54 is due and payable to the applicant under section 49(6), an order in FORM GST RFD-06 “shall be generated by the common portal”, showing any amount adjusted against outstanding demands and the balance refundable. Rule 92(4) is substituted so that the RFD-06 order and the RFD-05 payment order issue where “the proper officer is satisfied or where it is determined by the common portal”.
Is provisional refund now available for inverted duty structure claims?
Yes, from 1 November 2026. Section 54(6) of the CGST Act allowed provisional refund of 90% of the amount claimed only for claims “on account of zero-rated supply of goods or services or both”. Section 155(a) of the Finance Act 2026 inserts the words “or of unutilised input tax credit allowed under clause (ii) of the first proviso to sub-section (3)”, which is the inverted duty structure refund. The provisional route remains subject to the conditions, limitations and safeguards prescribed, and section 54(6) excludes “such category of registered persons as may be notified by the Government on the recommendations of the Council”.
How does the new inverted duty refund formula in rule 89(5) work?
Rule 89(5) is substituted from 1 November 2026. The comparison below is taken from the rule as it stood and the substituted text.
| Element | Rule 89(5) until 31 October 2026 | Rule 89(5) from 1 November 2026 |
|---|---|---|
| Formula | {(Turnover of inverted rated supply) x Net ITC / Adjusted Total Turnover} minus {tax payable on such inverted rated supply x (Net ITC / ITC availed on inputs and input services)} | {(Turnover of inverted rated supply of goods and services) x Net ITC / Adjusted Total Turnover} minus tax payable on such inverted rated supply of goods and services |
| “Net ITC” | Input tax credit availed on inputs during the relevant period | ITC availed on inputs and eligible input services during the relevant period, plus ITC on capital goods attributable to the relevant period |
| Input services | Not part of Net ITC | “Eligible input services” means input services on which ITC has been availed on or after 1 November 2026 |
The capital goods element depends on the definition of “capital goods attributable to the relevant period” in the new clause (G) of rule 89(4), which applies from 1 April 2027. It covers capital goods on which ITC is availed on or after 1 April 2027, spread at 1/60 of the eligible ITC per month over sixty months, less applicable reversals. A matching declaration on capital goods, new clause (p) of rule 89(2), also applies from 1 April 2027.
What changes for exporters claiming GST refunds?
- The 1.5 times cap is omitted (rule 89(4)(C)). The definition of “turnover of zero-rated supply of goods” for refunds of ITC on exports under bond or LUT included the words “or the value which is 1.5 times the value of like goods domestically supplied by the same or, similarly placed, supplier, as declared by the supplier, whichever is less”. These words are omitted with effect from 1 November 2026.
- No Rs 1,000 floor for exports with payment of tax (section 54(14)). Section 54(14) bars any refund under section 54(5) or (6) below one thousand rupees. Section 155(b) of the Finance Act 2026 carves out “cases where refund of tax is claimed on account of goods exported out of India with payment of tax”.
- Facilitation Centre route removed (rule 89(1) and (1A)). The words allowing a refund application “either directly or through a Facilitation Centre notified by the Commissioner” are omitted.
Which refund changes apply later?
| Change | Provision | Applies from |
|---|---|---|
| Ten-day acknowledgement, deemed acknowledgement | Rule 90(2), (3), (3A) | 1 November 2026 |
| Portal-generated RFD-04 in three working days | Rule 91(2) | 1 November 2026 |
| Provisional refund for inverted duty claims; Rs 1,000 floor carve-out | CGST Act s.54(6), s.54(14) | 1 November 2026 |
| Order of debit of the electronic credit ledger (IGST first, then CGST and SGST/UTGST equally) | Rule 89(3) | 1 November 2026 |
| New inverted duty formula; 1.5 times cap omitted | Rule 89(5); rule 89(4)(C) | 1 November 2026 |
| Supporting statements reworded to “details” of invoices; new statements (ha), (n) and the prosecution declaration (o) | Rule 89(2) | 1 December 2026 |
| Capital goods in refund formulae; capital goods declaration (p) | Rule 89(4)(B), (G); rule 89(2)(p) | 1 April 2027 |
What should businesses and their CAs do now?
- Track the ten-day window on every refund application filed from 1 November 2026. If no RFD-02 or RFD-03 issues within ten days of filing, the portal is to make a deemed acknowledgement available in RFD-02, and the sixty-day period under section 54(7) counts from the filing date.
- Recompute inverted duty claims for periods from November 2026 under the substituted rule 89(5), keeping a record of ITC on input services availed on or after 1 November 2026, since only that ITC counts as “eligible input services”.
- Exporters under LUT should recompute the zero-rated turnover of goods without the 1.5 times limit for claims covered by the amended rule 89(4)(C).
- Prepare for the 1 December 2026 statements. From that date, rule 89(2) asks for invoice “details” rather than number and date, and adds the prosecution declaration under clause (o) for refunds of unutilised ITC and of tax on zero-rated supplies made with payment of tax.
- Start capital goods records for ITC availed from 1 April 2027 if your refund claims will include it.
Sources
- Source: Central Board of Indirect Taxes and Customs, Notification No. 05/2026-Central Tax, 26 October 2026 (Central Goods and Services Tax (Amendment) Rules, 2026), taxinformation.cbic.gov.in.
- Source: Central Board of Indirect Taxes and Customs, Notification No. 03/2026-Central Tax, 26 October 2026 (commencement of sections 153 to 155 of the Finance Act 2026 from 1 November 2026), taxinformation.cbic.gov.in.
- Source: The Finance Act, 2026 (4 of 2026), section 155, Gazette of India Extraordinary, Part II, Section 1, 30 March 2026, egazette.gov.in.
- Source: Central Goods and Services Tax Act, 2017, section 54, and Central Goods and Services Tax Rules, 2017, rules 89 to 92, CBIC tax information repository, taxinformation.cbic.gov.in.
Related reading on Tax Update India: the 57th GST Council recommendations of 8 October 2026 and the RoDTEP extension to 31 December 2026 for exporters.
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Disclaimer: This article is for general information only and reflects the law as on the date of publication. It is not legal or tax advice. Please consult a qualified professional before acting on it.
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