Reforms to be updated on 22nd of September 2025

The 56th GST Council meeting on September 3-4, 2025, approved comprehensive reforms in GST registration and refund mechanisms as part of the “Next Generation GST” initiative. Here are the detailed rules and implementation frameworks:

Registration Reforms: Simplified GST Registration Scheme

Quick Registration for Low-Risk Businesses

Rule Framework: Under the amended Rule 8 of CGST Rules 2017, businesses are categorized based on risk parameters developed through data analysis.

Eligibility Criteria:

• Businesses classified as “low-risk” based on GSTN’s data analysis and risk parameters
• Voluntary declaration that monthly Input Tax Credit (ITC) claims will not exceed ₹2.5 lakh
• Estimated 96% of new applicants qualify for this simplified process

Timeline: Automatic registration approval within 3 working days for qualifying businesses (reduced from current 30 days).

Biometric Authentication System

Mandatory Biometric Verification Rules:

Risk-Based Selection: Applicants flagged by the system based on risk parameters must complete biometric Aadhaar authentication and document verification at designated GST Suvidha Kendras (GSKs).

State-wise Implementation:

• Active States: Gujarat, Puducherry, Uttar Pradesh (March 15, 2025), Assam (April 1, 2025), Sikkim (May 1, 2025), Jharkhand, Andaman & Nicobar Islands (February 15, 2025)
• Extended Nationwide: CBIC Notification 13/2024 dated July 10, 2024, extended biometric authentication across India

Process Flow:

1. Submit Form GST REG-01
2. Receive email with either:
   • OTP-based Aadhaar authentication link (for low-risk applicants), OR
   • GSK appointment booking link (for risk-flagged applicants)
3. Complete verification within 15 days
4. ARN generation post-verification

Required Documents for GSK Visit:

• Original Aadhaar and PAN cards
• Original documents uploaded with REG-01 application
• Appointment confirmation email
• Hard/soft copy of jurisdiction details

Non-Compliance Consequence: Failure to complete biometric verification within 15 days results in non-generation of Application Reference Number (ARN), effectively rejecting the application.

Refund Reforms: Accelerated Processing Framework

Seven-Day Refund Window

Coverage:

• Export refunds based on risk analysis
• Inverted duty structure sectors: textiles, chemicals, fertilizers, pharmaceuticals
• Provisional refunds for qualifying cases

Rule Specification: 90% provisional refund within 7 days for export-related claims, with full processing within 60 days.

Enhanced Refund Eligibility Rules (Effective August 28, 2025)

New GSTN Advisory Changes:

Previous Restriction: Refunds allowed only when cumulative Demand ID showed negative balance and status was “Refund Due.”

New Rule: Refunds permitted even when:

• Cumulative balance is positive or zero
• Any minor head (CGST/SGST/IGST/Cess) shows negative balance
• System auto-populates only negative amounts in Form RFD-01

Automated Features:

• System suggests most recent demand order for negative balances
• Tooltips provide guidance for Order Number and Demand ID fields
• Enhanced processing for assessment/enforcement/appeal orders

Export Refund Streamlining

ICEGATE Integration:

• Small refunds up to ₹1,000 facilitated through ICEGATE
• 1.5 lakh pending shipping bills expected to be cleared
• Automated validation between GSTR-1 export details and ICEGATE system

Processing Timeline:

• Acknowledgment: Within 15 days of RFD-01 filing
• Provisional Refund: 90% within 7 days post-acknowledgment for zero-rated supplies
• Final Order: Within 60 days maximum
• Interest on Delays: 6% per annum if department delays beyond 60 days

Inverted Duty Structure Relief

Provisional Refund Mechanism: Seven-day provisional refunds for sectors with inverted duty structures where input tax rates exceed output tax rates.

Qualifying Sectors: Textiles, pharmaceuticals, chemicals, fertilizers specifically mentioned for expedited processing.

Implementation Timeline and Compliance

Immediate Effect (September 3, 2025)

Registration: Simplified registration scheme operational for new applications.

Refunds: Enhanced portal functionality for refund claims active since August 28, 2025.

Ongoing Implementation

Biometric Authentication: Continues for risk-flagged applicants across all states.

Automated Refunds: Seven-day processing window being operationalized for qualifying categories.

Operational Rules for Businesses

For Registration

Low-Risk Qualification:

• Maintain monthly ITC claims below ₹2.5 lakh threshold
• Ensure clean compliance history for risk scoring
• Complete applications accurately to avoid biometric flagging

Biometric Process Compliance:

• Respond to GSK appointment emails within 15 days
• Carry all required original documents
• Complete verification process to avoid ARN rejection

For Refunds

Enhanced Claims Process:

• File RFD-01 when any tax head shows negative balance
• Utilize auto-populated suggestions for order numbers
• Maintain supporting documents for faster processing

Export Refund Optimization:

• Ensure GSTR-1 and ICEGATE data consistency
• Leverage provisional refund facility for cash flow management
• File within 2-year limitation period under Section 54

The reforms represent a fundamental shift toward risk-based, technology-driven compliance with faster processing times for genuine taxpayers while maintaining stringent verification for high-risk cases. The success depends on effective implementation of data analytics for risk assessment and seamless integration between various GST portal functionalities.