The Goods and Services Tax Council is set to announce significant export-friendly adjustments, including faster refunds and broader zero-rated export definitions, aimed at easing cash flow for over 38,000 exporters in India.
The Goods and Services Tax Council is expected to consider a fresh round of export-friendly changes at its October 7 meeting, with proposals that could free up cash for more than 38,000 exporters and reduce the amount of tax credit trapped in the system, according to reporting by Moneycontrol and other Indian business outlets.
At the centre of the package is a plan to allow exporters to seek cash refunds on input taxes paid on services, as well as on plant and machinery. Moneycontrol reported that refunds tied to plant and machinery would be spread over five years, a design that would ease the immediate fiscal hit while still improving liquidity for businesses that have money locked up in tax credits.
The changes are also expected to make the refund process faster and more automated. According to Moneycontrol, claims would be acknowledged within 10 days, with an acknowledgement deemed issued if officers do not act in time. Roughly 90% of a refund could be released automatically after a risk check, with the remainder paid after the usual verification. The system would also match export invoices against bank realisations, which could cut delays and disputes.
Another significant proposal would broaden the definition of zero-rated exports, a tax category that allows goods or services to be exported without GST. Reporting by Moneycontrol said supplies delivered to overseas clients would be brought into that category, removing a requirement that has created difficulties for Indian companies billing foreign customers or receiving payments through their own overseas branches. The proposed change would remove the condition that the supplier and recipient cannot be parts of the same entity.
The council is also understood to be weighing relief for Indian businesses that test, repair or process goods owned by overseas clients. At present, such work is taxed at 18% GST, but under the proposal it could be treated as an export and taxed at nil rate. That would be especially relevant for global capability centres in India, which perform engineering, product development and testing work for overseas group companies and are paid in foreign exchange.
Moneycontrol reported that the October 7 session will be the council’s first in more than a year and will focus on process reforms rather than rate changes. Other Indian publications, including the Economic Times and the Financial Express, have said the broader agenda may also include faster refunds, wider input tax credit access and tighter automation in compliance. If approved, the measures would mark a notable shift towards easing cash-flow pressure and simplifying compliance for exporters and other businesses operating in India’s indirect tax system.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
