The GST Council has approved a series of measures to widen input tax credit (ITC) eligibility and ease refund rules, with potential implications for businesses across sectors.
At its 57th meeting, the Council allowed ITC on health and life insurance purchased for employees, as well as on telecommunication towers and pipelines installed outside factory premises. Credit will also be available on certain free samples and stock written off after expiry where destruction is mandated under law.
In a significant move for the hospitality sector, the Council has allowed the credit chain to continue for services that are bought and resold in the same line of business. The measure covers hotel accommodation costing up to INR 7,500 per night when booked through an agent, along with restaurant and catering services and passenger transport. Earlier, ITC was restricted on these services as they attract GST at 5% without ITC.
The Council has also expanded refunds under the inverted duty structure to include tax paid on input services. The change will apply to ITC availed from November 1, 2026.
Further, the exclusion of tax paid on plant and machinery from refunds will be removed for exporters and businesses operating under an inverted rate structure. Refunds on such credit will be calculated at one-sixtieth of the credit for each month and will apply to ITC availed from April 1, 2027.
The Council will also constitute a Committee of Officers to examine safeguards for genuine buyers who hold valid invoices, have received goods and have made full payment to suppliers.
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