Stories
GST Council Proposes Major ITC And Refund Overhaul To Boost Business Cash Flow
- •The GST Council recommended removing certain restrictions under Section 17(5) of the CGST Act for specified expenses such as health and life insurance, outdoor catering, and written-off expired goods.
- •Refunds of input-service credit under the inverted duty structure are proposed for credit availed on or after November 1, 2026.
- •Refunds of capital-goods credit for specified zero-rated supplies and inverted duty cases are proposed for credit availed starting April 1, 2027.
- •The Council recommended provisional refunds of 90 percent of the claimed amount subject to system-based risk assessment.
- •The timeline for refund acknowledgements and deficiency memos is proposed to be reduced from 15 days to 10 days.
Key Questions Answered
The GST Council recommended removing certain restrictions under Section 17(5) of the CGST Act for specified expenses, including outdoor catering, health and life insurance, telecom towers, pipelines outside factory premises, free samples, and goods destroyed or written off due to expiry where required by law.
Refunds of input-service credit under the inverted duty structure are proposed for credit availed on or after November 1, 2026. Refunds of capital-goods credit for specified zero-rated supplies and inverted duty structure cases are proposed for credit availed on or after April 1, 2027, with the amount spread over 60 months.
The proposed change to the refund acknowledgement and deficiency-memo timeline reduces the period from 15 days to 10 days. If neither document is issued within 10 days, an acknowledgement will be deemed to have been issued.
