GST Council: Faster Input Tax Credit Refunds and Relief for Service Exporters

The Goods and Services Tax (GST) Council, at its 57th meeting on Thursday, 8 October 2026, recommended a set of process reforms aimed at freeing up working capital for businesses, the Indian Express reported.

Quick Facts

Meeting	57th GST Council, New Delhi
Date	8 October 2026
ITC refund on input services	From 1 November 2026
ITC refund on capital goods	From 1 April 2027, spread over 60 months

Refunds of Input Tax Credit

The Council recommended amending Section 54(3) of the Central GST Act to allow refunds of accumulated input tax credit on capital goods, such as plant and machinery, and on input services under the inverted duty structure.

Finance Minister Nirmala Sitharaman said the change for input services applies from 1 November 2026, and for capital goods from April next year.

“Major sectors including FMCG, pharma and food will now be able to monetise this credit and free up working capital,” said Abhishek Jain of KPMG in India.

Help for Service Exporters

The Council also recommended aligning the tax treatment of service exports with business practice. An Indian firm that serves a foreign client through its own overseas branch will be able to claim export benefits.

The Arrest Powers Debate

The meeting was also due to take up a proposal to decriminalise offences and remove tax officers’ powers of arrest before prosecution.

Ahead of the meeting, at least five large states, Maharashtra, Gujarat, Uttar Pradesh, Karnataka and Andhra Pradesh, had expressed reservations. A state minister told the Indian Express that the tax regime should not be made “toothless”, and suggested keeping a form of “civil arrest” for serious violations.

The reports reviewed for this article did not state the Council’s final decision on that proposal.

Source: Indian Express (8 October 2026).

Featured image: Nirmala Sitharaman, now Finance Minister, at a press conference in 2016 (file photo). Photo by the Ministry of Commerce and Industry, licensed under Government Open Data License – India, via Wikimedia Commons.