The Goods and Services Tax (GST) Council has approved a major reform to speed up compliance processes. Under the decision, GST refunds will now be processed within seven days for select sectors, while business registrations for non-risky enterprises will be completed in just three days. Officials said the changes aim to strengthen cash flows, reduce bureaucratic delays, and improve India’s overall ease of doing business.
Faster Refunds to Ease Liquidity Concerns
According to the Finance Ministry, exporters in key industries including textiles, chemicals, fertilizers, and pharmaceuticals will benefit from the accelerated seven-day GST refund window. The measure is designed to provide quicker access to working capital for firms facing liquidity challenges.
Finance Minister Nirmala Sitharaman said at a press briefing that the Council’s decision “will give exporters a significant relief by ensuring timely refunds and reducing the cost of compliance.”
Industry associations welcomed the move but urged effective monitoring. “The commitment to seven-day refunds is welcome, but the system must be fully automated to prevent delays at the ground level,” said Amit Mitra, principal advisor to the West Bengal government and former finance minister, in remarks reported by the Economic Times.
Simplified GST Registration in Three Days
The Council also introduced a Simplified GST Registration Scheme, which allows low-risk businesses to complete the process within three days. The reform primarily targets small and medium enterprises (SMEs), which often face long waiting periods before being able to begin operations.
Officials stated that the Central Board of Indirect Taxes and Customs (CBIC) will employ data analytics to classify applicants as “low-risk” or “risky.” Those deemed low-risk will benefit from automatic approvals, while high-risk cases will continue to undergo detailed scrutiny.
“Reducing registration timelines from weeks to three days is a significant boost to entrepreneurship,” said Rajeev Gowda, economist and former parliamentarian. “However, risk-based classification will be the key to preventing misuse.”
Broader GST 2.0 Reforms
The procedural changes form part of a broader reform package often described as GST 2.0. The government has outlined three pillars: structural reform, rate rationalisation, and simplified compliance.
- Tax Rate Restructuring: Officials are considering merging existing slabs into a simpler structure, potentially with two main rates of 5% and 18%, alongside a higher 40% rate for luxury and “sin” goods.
- Pre-Filled Returns and Auto-Refunds: Pre-filled GST returns and automatic refunds are expected to roll out by October 2025, reducing human error and opportunities for tax evasion.
- Ease of Doing Business: The reforms align with India’s long-term goal of climbing global rankings for business competitiveness.
According to a report from the Federation of Indian Chambers of Commerce & Industry (FICCI), process simplification could cut compliance costs by up to 20 percent for small businesses.
Stakeholder Perspectives
Business leaders have responded positively to the announcements, though with cautious optimism.
Harsh Pati Singhania, president of FICCI, said the reforms “signal the government’s strong intent to support exporters and SMEs, who have been vocal about refund delays and registration hurdles.”
Tax experts, however, cautioned that implementation will determine the success of the reforms. Dr. Aarti Krishnan, a professor of public finance at Jawaharlal Nehru University, noted that “India has seen ambitious timelines announced in the past, but actual delivery has often been slowed by technical glitches and bureaucratic bottlenecks.”
Political and Economic Context
The Council’s decision comes at a time when India is seeking to maintain its high growth trajectory while addressing pressures on exporters from global economic uncertainties. Analysts argue that the reforms are part of the government’s broader effort to demonstrate responsiveness ahead of the 2026 state elections.
The GST, launched in 2017, was intended to unify India’s indirect tax system but has faced criticism for complex compliance and refund backlogs. The current package is positioned as a corrective step to streamline processes and improve trust between businesses and the state.
Conclusion
The GST Council’s approval of seven-day refunds and three-day registrations marks one of the most significant compliance reforms since the tax system’s introduction in 2017. While the measures promise to ease business operations and improve liquidity, their effectiveness will depend on execution at both the central and state levels. Industry groups, exporters, and SMEs will be closely watching to see if the reforms deliver on their ambitious timelines.
