Archive · 2 Jun 2025
Industry Calls for GST Input Tax Credit Reforms
Businesses in India are asking for changes to how taxes work under the Goods and Services Tax (GST).
They have too much tax credit stuck, which is like having money locked up that they can't use.
They want to use this credit to pay for other taxes, get refunds more easily, and share credits between different parts of the same company.
These changes could help businesses, especially those that export, by lowering costs and making it easier to do business.
It could also help the whole economy grow.
Industry leaders propose reforms to the GST's Input Tax Credit (ITC) system.
The aim is to reduce credit accumulation and ease liquidity issues faced by businesses.
Key recommendations include using ITC for Reverse Charge Mechanism (RCM) liabilities and a new refund system.
Transfer of IGST and CGST credit balances between entities is proposed.
Exporters are expected to benefit through lower costs and global competitiveness.
- Who
- Industry leaders and financial experts
- What
- Reforms to the Input Tax Credit (ITC) rules under GST
- When
- Recently, with proposals submitted to the Revenue Department.
- Where
- India
- Why
- To address liquidity constraints and improve operational efficiency within the GST framework.
- Focus
- Input Tax Credit
- Key Issues
- Accumulation, liquidity constraints
- Proposed Reforms
- Allowing ITC for RCM liabilities, refund mechanism
- Enabling transfer of IGST and CGST credit
- Optimize credit utilization and improve business efficiency.
- Expected Benefits
- Potential economic growth, job creation