Companies in hospitality, insurance, infrastructure and export sectors will gain from wider input tax credit eligibility and relaxed inverted-duty refund rules, with some changes taking effect from 2026.
The GST Council has moved to widen input tax credit eligibility and relax refund rules in changes that could affect companies well beyond the hospitality industry, including insurers, infrastructure operators and exporters. According to the report, the council approved credit on employee health and life insurance, along with telecommunication towers and pipelines installed outside factory premises. It also extended eligibility to some free samples and to stock written off after expiry when destruction is required by law. For hotels, restaurants, catering and passenger transport, the decision is more consequential: the credit chain will continue when such services are bought and resold in the same line of business, including hotel stays of up to INR 7,500 a night booked through an agent. The move follows a long-standing restriction on these services, which have been taxed at 5% without input tax credit. The council also agreed to widen refunds under the inverted duty structure so they can cover tax paid on input services, with that change set to apply to credit taken from 1 November 2026. In another relief for exporters and businesses caught in inverted-rate structures, the exclusion of tax paid on plant and machinery from refunds will be removed, with the new method to be applied to credit taken from 1 April 2027. The council will also set up a committee of officers to examine protections for bona fide buyers who hold valid invoices, have received goods and have paid suppliers in full.
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