GST Refund Rules 2026: Changes from 1 Nov 2026

Check dates before you act: Most changes start on 1 November 2026, but several start on 1 December 2026, 1 January 2027 or 1 April 2027. This summary follows ICAI’s GST Update 276. Please confirm details against the official notifications.

This is the second part of our coverage of Notification 05/2026-Central Tax. For the registration changes, including Rule 14B and the new cancellation rules, see CGST Amendment Rules 2026: Key Changes for Taxpayers.

At a glance

ISD, returns and practitioner rules

• Input Service Distributor (Rules 39, 54 and 60): An ISD can distribute integrated tax credit as integrated tax or central tax credit. The word “common” is removed from Rule 39(1A), so reverse-charge input services attributable to one or more distinct persons can be distributed even if not commonly used by several registrations. Rule 54(1A) and Rule 60(2) are aligned, with FORM GSTR-6A now referred to in Rule 60(2).
• ITC on cancellation (Rule 44, from 1 December 2026): FORM GST REG-16 now carries the ITC payable amount when you apply for cancellation, along with FORM GSTR-10.
• Annual return in GSTR-4 (Rule 62(5)): If you withdraw from the composition scheme, the GSTR-4 due date is 30 June after the financial year in which you withdrew.
• GSTR-5 for non-resident taxable persons (Rule 63): The due date is now 13 days after the tax period, matching Section 39(5), instead of 20 days.
• GST practitioners (new Rule 83C): Changes to the particulars in FORM GST PCT-01 are made through FORM GST REG-14, with supporting documents.
• Other: The e-way bill exemption for goods moved by railways (Rule 138(2A)) now also covers metro railway. Provisional attachment orders under Rule 159 are issued in Part A of FORM GST DRC-22, and an objection can be rejected in Part B.

Refund process and timelines (from 1 November 2026)

Under the substituted Rule 92(4), the refund is credited electronically to the bank account declared in the registration and in the refund application, through a consolidated payment advice.

Credit ledger debit order (Rule 89(3)): When you claim a refund, the credit ledger is debited in a fixed order: integrated tax to the extent available, then central tax and State or UT tax equally, and any shortfall in one ledger is made up from the other credit ledger. Rule 86(3) is aligned with this.

Refund documents, declarations and formulas

Documents and declarations (from 1 December 2026)

• Rule 89(2) now applies to refund applications under sub-rules (1A) and (1B) as well as (1).
• In clauses (b), (ba), (bb), (c), (d) and (e), “number and date” of invoices is replaced by “details”.
• Clause (h) expands the documents for inverted duty refunds under Section 54(3)(ii), covering invoices received, ITC availed and invoices issued.
• New clause (ha): suppliers making concessional-rate supplies to merchant exporters under Notifications 40/2017-CT(R) and 41/2017-IT(R) must give invoice-wise details with the shipping bills or bills of export.
• New clause (n): refund claims for zero-rated supplies without payment of tax and inverted duty must give invoice-wise details of inward supplies and ITC availed.
• New clause (o): a declaration of no prosecution for any offence where tax evaded exceeds ₹250 lakh in the preceding five years, for unutilised ITC refunds or zero-rated supplies with payment of tax.
• New clause (p), from 1 April 2027: a declaration that capital goods in the claim have not been sold, disposed of or permanently removed, are eligible for ITC and are used for the relevant zero-rated or inverted-rated supplies.
• FORM GST RFD-01 is substituted from 1 December 2026, with more refund grounds in Table 8, a capital goods Y/N flag, revised declarations and revised statements and annexures.

Refund formulas (Rule 89(4) and 89(5))

• Input services and capital goods are now part of Net ITC. For inverted duty refunds, eligible input services are those on which ITC is availed on or after 1 November 2026. Capital goods ITC counts proportionately over 60 months from 1 April 2027, at 1/60th for each relevant month, after reversals.
• Export turnover valuation: From 1 November 2026, the alternative valuation at 1.5 times the value of like goods supplied domestically is removed from Rule 89(4)(C).
• Inverted duty formula (Rule 89(5)): Maximum refund = (turnover of inverted rated supply of goods and services × Net ITC ÷ adjusted total turnover) − tax payable on such inverted rated supply. Net ITC is ITC on inputs and eligible input services for the period, plus ITC on capital goods attributable to the period.

Rule 86A: blocking the electronic credit ledger (from 1 April 2027)

1. The power now sits with the “proper officer”, not only a Commissioner or an officer above a set rank.
2. The restriction must be by an order in FORM GST DRC-26, which is available on the portal.
3. It stays in force for one year from issue or until the officer allows the debit, whichever is earlier.
4. You can file an objection in FORM GST DRC-27.
5. After a hearing, the officer issues FORM GST DRC-28: Part A allows the debit and Part B rejects the objection.

This gives taxpayers a written order and a defined objection route.

Scrap and waste dealers: registration and TDS (from 1 November 2026)

Notification 06/2026-Central Tax (27 October 2026) amends Notification 5/2017-Central Tax. The exemption from registration for persons who only make supplies on which the recipient pays tax under reverse charge will not apply to anyone supplying these goods:

• Used cooking oil (heading 1518)
• Waste and scrap of plastics (heading 3915)
• Waste and scrap of tyres (heading 4004)
• Metal scrap (Chapters 72 to 81)
• Electrical and electronic waste and scrap (heading 8549)

Notification 07/2026-Central Tax (27 October 2026) amends Notification 50/2018-Central Tax. A registered person receiving the same goods from another registered person must deduct TDS under Section 51. Please check the notification for the rate and conditions.

Alongside these, Notification 04/2026-Central Tax (Rate), covered in our GST rate changes post, puts supplies of the same goods by unregistered persons under reverse charge.

What to do now

1. Exporters and inverted-duty manufacturers: re-run your refund working with input services and capital goods, and prepare invoice-wise annexures before 1 December 2026.
2. Refund claimants: keep the bank account in your registration up to date, as refunds will be credited there and adjusted against any outstanding demand.
3. ISD registrants: review how reverse-charge input services are distributed.
4. Composition taxpayers withdrawing from the scheme: diarise 30 June for GSTR-4.
5. Scrap and waste dealers: check whether you now need registration, and whether you are receiving these goods from a registered person and need to deduct TDS.
6. Keep the official notifications with your compliance file.

FAQs

Related reading: GSTN Advisory 678 on e-invoicing, 57th GST Council meeting and our tax preparation and planning services.

Based on ICAI’s GST Update 276 on Notifications 05/2026, 06/2026 and 07/2026-Central Tax. Details may change, so please check the official notifications on the CBIC GST website before acting. This post is for general information and is not tax or legal advice.