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GST Council Expands Input Tax Credit and Refunds for Businesses
M
Moneycontrol•08-10-2026, 18:40
GST Council Expands Input Tax Credit and Refunds for Businesses
- •The 57th GST Council expanded the scope of input tax credit (ITC) and moved to protect genuine buyers holding proper invoices.
- •Businesses can now claim ITC on employee health and life insurance, telecommunication towers, pipelines, free samples, and destroyed expired stock.
- •The tax chain is now continuous for specified services like hotel bookings, catering, and passenger transport to avoid double taxation.
- •Input services have been brought under the inverted-duty refund mechanism starting from November 1, 2026.
- •Exporters and businesses with inverted duty structures can recover tax paid on plant and machinery through monthly refunds starting April 1, 2027.
Key Questions Answered
The GST Council has allowed businesses to claim input tax credit on employee health and life insurance, telecommunication towers and pipelines laid outside factories, free samples, and stock written off after its shelf life expires.
The inclusion of input services under the inverted-duty refund mechanism will apply to credit availed on or after November 1, 2026.
Under the system applying to credit availed on or after April 1, 2027, the refund on plant and machinery will be calculated at one-sixtieth of the credit for each month, matching the asset's working life.
