Centre speeds up GST refunds, cuts tax on retreaded tractor tyres; key changes from November 1

New Delhi, Oct 28 : The Central Government has notified a series of significant changes to the Goods and Services Tax (GST) framework, introducing faster refund processing, simplified registration for eligible e-commerce sellers and reduced tax on retreaded tractor tyres. Several key provisions will come into effect from November 1.

The amendments, notified by the Ministry of Finance following recommendations of the GST Council, also revise provisions relating to electronic invoicing, input tax credit, registration and cancellation procedures, besides introducing stricter compliance requirements for transactions involving scrap materials.

Under the revised rules, the time limit for acknowledging GST refund applications has been reduced from 15 days to 10 days. Tax authorities will also be required to communicate any deficiencies in applications within the stipulated 10-day period. If officials fail to issue an acknowledgement or communicate deficiencies within the prescribed timeframe, the application will be deemed to have been acknowledged.

The government has also introduced a risk-based mechanism for generating provisional refund sanction orders through the GST portal within three working days of acknowledgement. However, this provision does not mean that the refund amount will necessarily be credited to taxpayers' bank accounts within three days.

Another significant amendment expands the scope of refunds under the inverted duty structure, where the tax paid on inputs is higher than the tax payable on finished products. The revised formula will include eligible input services on which input tax credit is availed from November 1. The inclusion of eligible input tax credit on capital goods in refund calculations will come into effect from April 1, 2027, subject to specified conditions.

The government has also introduced a new Rule 14B to facilitate GST registration for eligible suppliers selling goods through e-commerce operators required to collect tax at source. Under this provision, eligible sellers can obtain registration in states where they do not have a physical business presence by declaring the warehouse of an e-commerce operator as their principal place of business.

The facility will be subject to specified conditions, including consent from the e-commerce operator and a monthly output tax liability not exceeding Rs 2.5 lakh on specified supplies to registered persons, excluding those registered under the same Permanent Account Number. E-commerce operators will have seven working days to communicate their consent. Applications will also be subject to Aadhaar authentication, document verification and physical verification requirements.

In a major relief to the agricultural sector, the GST rate on retreaded tractor tyres has been reduced from 18 per cent to 5 per cent with effect from November 1.

Pre-packaged and labelled animal, vegetable and organic fertilisers will continue to attract 5 per cent GST, with registered seaweed-extract-based biostimulants explicitly included in the relevant category. Psyllium seeds, commonly known as isabgol, have also been included in the GST exemption schedule.

The government has further expanded the reverse-charge mechanism to cover supplies of used cooking oil, plastic waste and scrap, tyre waste and scrap, and electrical and electronic waste and scrap from unregistered suppliers to registered recipients. Under this arrangement, the registered recipient will be responsible for paying the applicable GST instead of the unregistered supplier.

Related amendments also revise registration exemptions and tax deduction at source provisions for specified transactions involving these goods and metal scrap.

The changes will be implemented in phases. While several major provisions will take effect from November 1, certain amendments relating to registration and refund documentation will become applicable from December 1.

Changes extending notified electronic invoicing categories to specified reverse-charge transactions involving unregistered suppliers and imports of services will come into effect on January 1, 2027.

Further amendments concerning input tax credit on eligible capital goods and specified procedures for registration cancellation and revocation are scheduled to take effect from April 1, 2027.

The latest measures aim to streamline GST compliance, accelerate refund processing and provide tax relief to selected sectors while strengthening safeguards and monitoring of transactions involving scrap materials.