The Finance Bill 2026 is expected to introduce significant amendments to the GST law, with a focus on simplifying compliance, enhancing liquidity and boosting business confidence under the GST 2.0 framework.
According to senior government officials, the upcoming Bill will include provisions for fast-track GST registration, automatic 90% refunds under the inverted duty structure (IDS) and several procedural simplifications to improve ease of doing business.
"These will form part of the law changes proposed for inclusion in the upcoming Budget," a senior official told said. "The focus is on faster registration and quicker refund settlement. A proposal for 90% provisional refund under the inverted duty structure will also be included," the official said.
Fast-Track GST Registration: Quicker Entry for Low-Risk Taxpayers
The risk-based fast-track registration mechanism, introduced on November 1, 2025, aims to provide GST registration approvals within three working days for low-risk applicants whose Aadhaar and PAN details are verified.
While the framework has been operationalised, the formal legal amendment to the Central GST Act will be made through the Finance Bill 2026.
Officials explained that the system leverages data analytics and risk-based parameters to automatically verify applications, thereby reducing manual intervention and curbing discretion at field levels.
"The system will automatically verify applications based on predefined risk parameters, cutting approval time and easing business entry," the official said, adding that stricter checks will remain in place for high-risk applicants.
The measure aligns with the government's larger, faceless, technology-driven governance initiative under GST 2.0, ensuring faster onboarding and greater transparency.
Automatic 90% Refund Under Inverted Duty Structure
Another key amendment to be included in the Finance Bill is the proposal for automatic sanction of 90% of refund claims under the inverted duty structure (IDS), with the remaining 10% processed post-verification.
The framework aims to ease working capital pressure on industries such as textiles, footwear and fertilisers, which have long faced liquidity challenges due to delayed refunds.
"The 90% of the claim is sanctioned upfront on a risk-assessed basis. It will ease cash flow constraints for manufacturers and exporters," the official said.
Currently, IDS refunds require manual verification, leading to long delays and accumulation of unutilised input tax credit (ITC). The automated refund mechanism is designed to streamline the process, making it largely system-driven and time-bound.
Addressing Long-Standing Industry Concerns
An inverted duty structure arises when the tax rate on inputs is higher than that on finished goods, resulting in excess ITC accumulation. Several sectors-especially textiles, footwear and electronics have repeatedly urged the government to rationalise rates or automate refund processes.
The Finance Bill 2026 is expected to legislate the automatic refund mechanism, providing a long-term solution to this issue and improving liquidity cycles for exporters and MSMEs.
Paving the Way for a Trust-Based GST 2.0 System
Officials noted that the upcoming amendments are part of the broader GST 2.0 reform agenda, which seeks to create a trust-based, technology-driven compliance ecosystem.
"These changes will help strengthen confidence in the tax system, reduce delays and improve compliance through automation," the official said.
The Finance Bill 2026, to be tabled in Parliament with the Union Budget 2026-27, will serve as the legislative foundation for these reforms-ushering in a faster, simpler, and more predictable GST regime.
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