A provisional sanction is one stage of the claim
From 1 November 2026, the amendment to section 54(6) of the CGST Act expressly extends provisional refunds to eligible unutilised ITC under the inverted-duty limb of section 54(3). Section 155 of the Finance Act, 2026 was commenced by Notification 03/2026–Central Tax. The amended rule 91(2) under Notification 05/2026–Central Tax provides for a system-generated RFD-04 based on risk evaluation, within three working days of the applicable rule 90 acknowledgement. Government implementation guidance describes provisional sanction of 90% of the claimed amount for eligible low-risk inverted-duty claims; final scrutiny is separate.
Read the applicable text: Gazette: Finance Act, 2026, section 155 CBIC Notification 03/2026–Central Tax (copy of Gazette notification) Gazette: Notification 05/2026–Central Tax, rules 89–92 CBIC: rule 92(1) final-order reconciliation PIB: risk-based provisional refund implementation guidance.
Check eligibility before forecasting cash
First verify whether the refund is available under section 54(3), including exclusions for notified goods and other applicable conditions. Apply the version of rule 89(5) relevant to the claim; the provisional percentage does not calculate the underlying eligible ITC or maximum refund. Under the substituted formula, multiply inverted-rated turnover by Net ITC, divide by adjusted total turnover and subtract the tax payable on the inverted-rated supplies. For input services, the new definition requires eligible credit availed on or after 1 November 2026. The separate attributable capital-goods mechanism starts on 1 April 2027 subject to its conditions. Check rule 91(1), the system risk outcome and applicable limitations. A claim not selected for automatic provisional sanction needs its own processing review and is not necessarily a final rejection.
Keep acknowledgement and payment events distinct
Capture the submission, RFD-02 acknowledgement or RFD-03 deficiency communication, then RFD-04 and any RFD-05 payment order. Amended rule 90(3A) provides for deemed acknowledgement when neither RFD-02 nor RFD-03 is provided within ten days; the common portal makes RFD-02 available indicating the filing date, from which the section 54(7) period is counted. For the provisional clock, use the applicable acknowledgement under rule 90(1A), (2) or (3A) as specified in rule 91(2), and confirm the working-day calendar. The portal-generated RFD-04 does not require officer revalidation under the amended rule. The order clock does not promise that cash reaches the bank within the same interval.
Close the claim against the final order
Rule 92(1) ties RFD-06 to the amount sanctioned, any provisional refund, adjustments against outstanding demand and the balance refundable. Reconcile the order amount, payment order, actual credit and any documented adjustment by claim reference. Where the final entitlement is below the amount provisionally paid, isolate the difference and follow the applicable order or recovery process. Do not automatically net the difference against a different claim.
Six worked illustrations
All facts and amounts are fictional. Calculations illustrate the stated assumptions, not a predetermined legal outcome.
Illustrative example 1: Provisionally sanctioned portion
Assume a valid ₹800,000 low-risk claim qualifies for 90% provisional sanction. RFD-04 is ₹720,000 on those facts; the ₹80,000 remainder is not yet a final refund.
Illustrative example 2: Full final allowance
A ₹500,000 claim gets a ₹450,000 provisional credit. Final allowance is ₹500,000 and there are no adjustments. The balance payable is ₹50,000.
Illustrative example 3: Reduced final allowance
A ₹600,000 claim receives ₹540,000 provisionally. The final allowed amount is ₹560,000 with no adjustments. The balance is ₹20,000 rather than the ₹60,000 difference to the original claim.
Illustrative example 4: Final order adjusts an outstanding demand
Final entitlement is ₹750,000, provisional refund actually paid is ₹675,000 and the final order documents a ₹25,000 demand adjustment. The balance payable is ₹50,000.
Illustrative example 5: Amount provisionally paid exceeds final entitlement
A claim received ₹360,000 provisionally, but final entitlement is ₹320,000. Identify a ₹40,000 excess for follow-up under the applicable order; there is no additional cash refund on these figures.
Illustrative example 6: Working-day marker
Assume acknowledgement on Monday 9 November 2026 and that Tuesday through Thursday are all working days. Counting the three following working days gives Thursday 12 November as the illustrated order marker. It is not a bank credit deadline.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Verify claim category and period | Applicable section 54 and rule 89 computation. |
| 2 | Check excluded goods and provisional conditions | Current notifications, eligibility evidence and risk status. |
| 3 | Reconcile the claimed amount | Return extracts, invoice data and approved claim schedule. |
| 4 | Capture filing and acknowledgement | Application reference, RFD-02 or RFD-03 and dates. |
| 5 | Calculate the applicable working-day marker | Acknowledgement route and holiday calendar. |
| 6 | Check provisional sanction amount | RFD-04 and approved claim base. |
| 7 | Confirm payment and bank receipt | RFD-05 where available and bank entry. |
| 8 | Tie provisional figures to the final order | RFD-06 and linked claim reconciliation. |
| 9 | Resolve any demand adjustment or excess | Order details, underlying demand and response record. |
| 10 | Close only once the remaining amount is reconciled | Bank, liability adjustment and approved closing worksheet. |
Sixteen practitioner FAQs
1. Does section 54(6) now cover inverted-duty claims?
Yes, for the specified eligible unutilised ITC after the amendment takes effect.
2. When did the amendment commence?
1 November 2026 under Notification 03/2026–Central Tax.
3. Does 90% apply to every application?
No. The automated route is subject to risk evaluation and applicable conditions.
4. Does RFD-04 conclusively determine refund entitlement?
No. It is a provisional order.
5. What starts the rule 91(2) clock?
The applicable rule 90 acknowledgement.
6. Are the three days calendar days?
No. Rule 91(2) specifies working days.
7. Does the deadline cover actual bank credit?
No. It applies to generation of the provisional order.
8. What records an application deficiency?
FORM GST RFD-03.
9. What if neither acknowledgement nor deficiency communication appears within ten days?
Check rule 90(3A) and the portal-generated deemed acknowledgement.
10. Can the 90% figure replace the rule 89 calculation?
No. Determine the claim amount independently.
11. What if there is no provisional order?
Investigate eligibility and status; its absence does not itself prove final rejection.
12. What is the payment order form?
FORM GST RFD-05 where applicable.
13. What form records final sanction?
FORM GST RFD-06.
14. Can the final cash balance be below the unsanctioned percentage?
Yes, for example if final entitlement is reduced or a demand is adjusted.
15. What if provisional payment exceeds final entitlement?
Reconcile the excess and address it under the applicable process.
16. Can two refunds share one reconciliation line?
Keep each claim reference separately tied to its orders, payments and adjustments.
Official sources
Gazette: Finance Act, 2026, section 155 CBIC Notification 03/2026–Central Tax (copy of Gazette notification) Gazette: Notification 05/2026–Central Tax, rules 89–92 CBIC: rule 92(1) final-order reconciliation PIB: risk-based provisional refund implementation guidance