CBIC Issues Instruction No. 06/2025–GST on Risk-Based Provisional Refund Sanctioning

Introduction

In a significant move towards trade facilitation and process efficiency, the Central Board of Indirect Taxes and Customs (CBIC) has issued Instruction No. 06/2025–GST dated 3rd October 2025, providing detailed guidelines for risk-based sanctioning of provisional refund claims under the Goods and Services Tax (GST) framework.

This instruction follows the 56th GST Council Meeting held on 3rd September 2025, where amendments to Rule 91(2) of the CGST Rules, 2017 were recommended to enable the system-based identification and evaluation of risk for granting provisional refunds.

Background

Previously, refund claims filed under Rule 91 were sanctioned provisionally—typically up to 90%—based on manual evaluation by officers. To make the refund process faster and more transparent, the GST Council recommended that such provisional sanctioning be driven by system-generated risk evaluation rather than entirely by human discretion.

Pursuant to this, Notification No. 13/2025–Central Tax dated 17.09.2025 brought the amendment into effect from 1st October 2025, and Notification No. 14/2025–Central Tax specified the category of taxpayers ineligible for provisional refunds for zero-rated supplies.

Key Highlights of Instruction No. 06/2025–GST

1. System-Based Risk Evaluation

• Refund claims filed for zero-rated supplies (exports or supplies to SEZs) will now be processed using the system’s risk identification mechanism.
• Where the system flags a claim as low-risk, the officer shall sanction 90% of the claimed refund amount on a provisional basis.
• High-risk applications flagged by the system will not qualify for provisional sanction and will undergo detailed scrutiny as per the existing rules.

2. Strict Adherence to Timelines

• The refund process till issuance of FORM GST RFD-02 (Acknowledgement) or RFD-03 (Deficiency Memo) shall continue as per existing timelines.
• Delay in issuance of these forms must be strictly avoided to maintain process uniformity across field formations.

3. Officer’s Discretion in Exceptional Cases

• A proviso under Rule 91(2) allows the proper officer, in exceptional situations and for recorded reasons, to deny provisional sanction and instead conduct a detailed examination.
• However, CBIC has clarified that this discretionary power should be used sparingly, ensuring that trade facilitation is not hindered by unnecessary procedural delays.

4. Statutory and Risk Conditions

• The statutory conditions under Section 54(6) of the CGST Act and the prosecution-related restriction under Rule 91(1) remain applicable.
• Provisional refunds should not be granted where:
  • Previous refund matters are under appeal or litigation,
  • Show cause notices have been issued, or
  • Cases are pending adjudication or not yet finalized.
• In situations where provisionally sanctioned amounts exceed the admissible refund after final scrutiny, officers must issue FORM GST RFD-08 (Show Cause Notice) under the applicable provisions of Sections 73, 74, or 74A.

5. Extension to Inverted Duty Structure (IDS) Refunds

• The GST Council has also recommended amending Section 54(6) of the CGST Act to extend provisional sanction (90%) to refund claims arising from Inverted Duty Structure (IDS).
• Until the amendment is formally incorporated, the Central Government has decided to extend similar risk-based provisional sanction for IDS refund claims filed on or after 1st October 2025.
• The processing manner and statutory conditions will mirror those applicable to zero-rated refund claims.

6. Monitoring and Implementation

• The implementation of these instructions will be supervised by the Jurisdictional Principal Commissioner/Commissioner, who will report progress to the Principal Chief Commissioner/Chief Commissioner.
• The Board has emphasized that these measures should be implemented in letter and spirit, ensuring genuine trade facilitation and consistency across all GST formations.

Conclusion

With the introduction of risk-based provisional refunds, CBIC aims to expedite refund disbursements, reduce human intervention, and minimize delays faced by genuine exporters and taxpayers. The system-driven evaluation mechanism marks a step forward in digitization, transparency, and efficiency in the GST refund process — aligning with the government’s broader vision of making India’s indirect tax framework more business-friendly and trust-based.

Read more at: https://taxinformation.cbic.gov.in/view-pdf/1000564/ENG/Instructions