GST Council Meet: Over 38,000 exporters to get cash refunds on services and machinery taxes

The GST Council is likely to deliver a major liquidity boost to exporters on October 7 by expanding GST refund rules to cover services and heavy machinery, government sources said. Under the proposed reforms, more than 38,000 export taxpayers will become eligible to claim cash refunds on input taxes paid on services and plant and machinery, directly addressing the long-standing issue of capital being locked up under the indirect tax framework, the sources said. "Tax paid on services, and tax paid on plant and machinery, can now be refunded through the input tax credit route.

The refund on plant and machinery will spread over five years," one official said. "For an exporter, this is money that was locked inside the tax system and is now available to him as working capital." The refund process is also set to change. Under the proposed rules, the system will acknowledge a refund claim within 10 days.