GST Refunds to be Fast-Tracked via Mandated Risk-Based Approvals

GST Refunds to be Fast-Tracked via Mandated Risk-Based Approvals

The Central Government has mandated a new system to fast-track Goods and Services Tax (GST) refunds, requiring tax authorities to adopt a risk-based approach for processing and approving claims.

Key Features of the New System

• Risk-Based Approval: The new mechanism is designed to expedite refunds for compliant taxpayers. The system will employ analytics to categorize refund applications based on risk parameters.
  • Low-Risk claims will receive quicker, often automated, sanction.
  • High-Risk claims will undergo rigorous scrutiny and verification before approval.
• Faster Disbursement: The primary objective is to significantly reduce the time taken for refund disbursement, improving working capital liquidity for businesses, particularly exporters, who often see their funds blocked in the form of accumulated Input Tax Credit (ITC).
• Targeted Scrutiny: By focusing intensive human resources only on suspicious or high-risk cases, the department can minimize revenue leakage due to fraudulent claims while ensuring that genuine taxpayers face minimal procedural delays.
• Compliance Improvement: This initiative is part of the government’s broader effort to enhance the ease of doing business and incentivize better overall tax compliance by rewarding trustworthy taxpayers with faster service delivery.