Government amends CGST Rules, expands scope of e-invoicing and revises GST rate on certain goods and services, pursuant to the GST Council recommendations

This Tax Alert summarizes recent Notifications ^[1] issued by the Government pursuant to the recommendations made in the 57th Goods and Services Tax (GST) Council Meeting.

The key amendments are:

• Rule 89 of the Central Goods and Services Tax Rules, 2017 (CGST Rules) expands refund eligibility to include input tax credit (ITC) on capital goods for zero-rated supplies, and on input services and capital goods under the inverted duty structure.
• Eligible input service credit availed on or after 1 November 2026 to be refunded under the inverted duty structure. Capital goods credit availed on or after 1 April 2027 will be apportioned over 60 months, subject to prescribed conditions, for the purpose of refund.
• For refund computation, the cap restricting zero-rated goods turnover to 1.5 times the value of comparable goods supplied domestically, has been removed.
• Provisional refund of 90% of the amount claimed will be sanctioned through the portal within three working days of acknowledgement, based on system-driven risk identification and evaluation.
• From 1 January 2027, the scope of e-invoicing to be extended to supplies received from unregistered person on which the recipient pays tax under reverse charge, and to imports of services.

Comments:

• Declaration A of revised Form GST RFD-01 still has a requirement to declare that input service credit has not been availed in case of inverted duty refunds. This requirement may be now restricted to refund claims relating to period before 1 November 2026, in view of the amendment.
• Similarly, Declaration E of Form GST RFD-01 requires confirmation of non-prosecution for tax evasion exceeding INR5 crore during the five years preceding the relevant tax period, whereas amended Rule 89 and existing Rule 91(1) prescribe a new threshold of INR2.5 crore.
• Sanction of 90% provisional refund within three working days is expected to significantly ease working capital of businesses.
• Businesses covered by the expanded e-invoicing mandate will need to update their ERP and IT systems to capture relevant inward supplies, generate e-invoices and integrate with the Invoice Registration Portal. Timely configuration and testing may be critical to comply with new requirement from 1 January 2027.

^{[1] Notification No. 04 and 05/2026-Central Tax, both dated 26 October 2026, Notification Nos. 02 to 10/2026–Central Tax (Rate) and Notifications Nos. 06 to 07/2026-Central Tax all dated 27 October 2026}