Finance Bill 2026 to Carry Key GST Reforms for Automation and Liquidity

Finance Bill 2026 to Carry Key GST Reforms for Automation and Liquidity

Issue: To formalize the legislative framework for the “Next-Gen GST 2.0” structural and procedural reforms—specifically concerning fast-track registration and automated provisional refunds—by introducing necessary amendments to the GST law through the upcoming Finance Bill 2026.

Facts:

• The GST Council and the government have already rolled out the risk-based fast-track registration and 90% provisional refund mechanisms through administrative circulars and rules (effective November 1, 2025).
• However, these changes require statutory amendments to the core GST law for full legal backing and permanency.
• The proposed amendments are expected to be included in the Finance Bill 2026, which will be presented during the Union Budget.

Decision:

The upcoming Finance Bill 2026 is expected to carry the necessary legislative amendments to the GST law to provide statutory backing for the fast-track registration system and the automatic 90% refund mechanism.

Key TakeDowns:

• 90% Automatic Refund (IDS): A major reform expected is the automatic 90% provisional refund mechanism for Input Tax Credit (ITC) claims arising from the Inverted Duty Structure (IDS).
  • Mechanism: Taxpayers will receive 90% of their claim upfront, based on risk-assessed system checks, while the remaining 10% is processed after due verification.
  • Relief: This is intended to ease working capital pressures, which is a long-standing concern in sectors like textiles, footwear, and fertilizers.
• Fast-Track Registration: The law amendments will formalize the risk-based fast-track GST registration mechanism, which aims to approve new GST registrations for low-risk taxpayers within three working days after verification. * Technology Focus: The legislative changes underscore the government’s push toward a faceless, technology-driven compliance ecosystem, reducing manual intervention and discretion at the field level.
• Legislative Paving: The Finance Bill 2026 is the crucial step that will provide the legislative basis for these major systemic improvements, moving them from administrative directives to permanent law.