CBIC Instruction on Risk-Based Provisional Sanction of Refund Claims (Instruction No. 06/2025-GST)

In a significant step toward enhancing trade facilitation and speeding up GST refund disbursements, the Central Board of Indirect Taxes and Customs (CBIC) issued Instruction No. 06/2025-GST dated October 3, 2025. The instruction provides detailed guidelines for the provisional sanction of refund claims based on system-generated risk evaluation.

This reform follows the 56th GST Council Meeting (September 3, 2025), which recommended an amendment to Rule 91(2) of the CGST Rules, 2017, which are given below as follows:

• The amendment allows for 90% of refund claims to be processed on a provisional basis, based on the system’s identification and evaluation of risk. 
• In addition, a proviso has been added under rule 91(2) allowing officers, on a case-by-case basis, to withhold a provisional refund if deemed necessary. In such a case officer may record the reason in writing and carry out a detailed examination of application instead of granting it provisionally. 

Also vide notification No. 14/2025-Central Tax dated 17.09.2025, a certain class of registered persons under section 54(6) of the CGST Act 2017, who shall not be allowed a refund on a provisional basis of zero-rated supplies.

The Board issues the following directions to ensure uniform processing of zero-rated GST refund claims.

Procedure for Processing Refund Applications

• System-Based Risk Categorisation:
  Refund applications will now be classified as low-risk or otherwise based on system-driven risk parameters. In low-risk cases, 90% of the refund claimed shall be approved on a provisional basis.
  
• Uniform Implementation:
  CBIC emphasised strict adherence to existing timelines for issuing FORM GST RFD-02 (acknowledgement) or RFD-03 (deficiency memo), ensuring consistency across field formations.
  
• Officer Discretion – Case-by-Case Basis:
  While low-risk refund claims are to be provisionally sanctioned, officers retain discretion to withhold provisional refund in exceptional cases, provided reasons are recorded in writing as per the proviso to Rule 91(2).
  
• Restrictions and Exceptions:
  Provisional refunds shall not be granted to taxpayers notified under Notification No. 14/2025-Central Tax, or where issues are pending in appeal, under a show cause notice, or where past refund matters have not attained finality.
  
• Extension to Inverted Duty Structure (IDS):
  As an interim measure, the same 90% provisional refund mechanism applies to IDS refund claims filed on or after October 1, 2025, until the legislative amendment to Section 54(6) is enacted.
  
• Monitoring and Supervision:
  The implementation will be monitored by Principal Commissioners/Chief Commissioners, ensuring that trade facilitation intent is honoured in both letter and spirit.
  

Conclusion

The introduction of a risk-based provisional refund mechanism marks a pivotal step toward a more efficient and automated GST refund framework. By integrating system-based risk evaluation, CBIC aims to balance trade facilitation with revenue protection, ensuring faster refunds to compliant taxpayers while maintaining necessary checks.

This forward-looking approach aligns with the government’s broader agenda of ease of doing business and digital governance, ultimately improving liquidity for exporters and domestic suppliers while minimizing procedural delays.