Government to Refund GST Money Recovered Under Rule 96(10) to Exporters

Exporters in India are now pressing the government to reimburse GST refunds and interest previously recovered under the provisions of CGST Rule 96(10). This demand follows the retrospective removal of the rule, which had significant implications for the processing of GST refunds on exports.

Last week, the government implemented a series of notifications and circulars based on the Goods and Services Tax Council's recommendations during its 57th meeting held in Delhi on October 8, 2026. These policy changes aim to address various challenges faced by taxpayers and streamline GST compliance.

Among the key updates, the Central Board of Indirect Taxes and Customs (CBIC) issued Circular 264/10/2026-GST on October 26, which specifically addresses the issue of GST refunds in the context of exports. The circular clarifies procedures and provides guidance on the treatment of refunds, especially in light of the recent withdrawal of CGST Rule 96(10).

CGST Rule 96(10) had been a contentious provision, affecting the timing and manner in which exporters could claim refunds. Its retrospective omission means that actions taken under this rule, including the recovery of GST refunds and interest by tax authorities, must be reviewed. Exporters argue that since the rule no longer holds legal effect, the government is obliged to return the amounts collected under its enforcement.

The GST Council's 57th meeting was part of an ongoing effort to refine the GST framework, which was introduced in 2017 to unify indirect taxes across India. The council, which comprises state and central government representatives, regularly meets to resolve issues faced by businesses and to enhance the tax system's efficiency.

Exporters form a vital segment of the Indian economy, contributing significantly to foreign exchange earnings and manufacturing output. The GST refund mechanism is crucial for them to maintain cash flow and competitiveness in international markets. Delays or recoveries of refunds can adversely impact their operations.

By issuing the recent circular, the CBIC aims to provide clarity and ensure that exporters receive due refunds without unnecessary hurdles. The move to rescind Rule 96(10) retrospectively aligns with the council’s broader goal of making the GST process more taxpayer-friendly and transparent.

However, the situation also raises complex questions about the reversal of past recoveries. Tax authorities will need to establish clear procedures for refunding amounts collected under the now-invalidated rule. This may involve detailed reconciliations and coordination between various government departments.

Industry experts suggest that exporters should closely monitor official communications from the CBIC and GST Council to remain updated on procedural changes. Timely action may be necessary to claim refunds or address any notices received in connection with the rule.

In the backdrop of these developments, the government’s willingness to adapt GST regulations reflects its responsiveness to stakeholder concerns. The GST system continues to evolve as authorities seek to balance revenue interests with the ease of doing business.

As exporters await further guidelines, the resolution of this issue could set a precedent for how retrospective rule changes are handled in the GST framework going forward. Ensuring that taxpayers are treated fairly helps maintain confidence in the tax system and supports economic growth.

These reflections stem from personal analysis and do not necessarily represent the views of www.business-standard.com or the Business Standard newspaper.