Automatic Refunds Planned Under GST 3.0

The government is considering automating Goods and Services Tax (GST) refunds, similar to the income tax system, as part of the next phase of reforms envisioned under GST 3.0.

Speaking at an event organized by the TIOL Knowledge Foundation (TKF), Shashank Priya, Member (GST) of the Central Board of Indirect Taxes and Customs (CBIC), said, “We hope that, like income tax, we may also automate the refund process. It is on our minds.”

However, Priya declined to specify any timeline for implementation. He added, “We will need to hold consultations and put in place adequate safeguards. The government is very positive about carrying the reform agenda forward and simplifying the system.”

Under GST 2.0, the government has allowed provisional approval of 90% of refund claims filed under the inverted duty structure for applications submitted on or after October 1, 2025.

According to experts, refund claims arise not only from exports and inverted duty structures but also in cases where taxes are paid erroneously. For instance, when an intra-state supply is mistakenly treated as an inter-state supply (or vice versa), or when clerical errors lead to excess tax payments.

Refunds are also sought for amounts paid during investigations, audits, or as pre-deposits during appeals, when no final liability is established. However, such claims often face lengthy verification and procedural delays before approval.

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