“As the scope of refunds under the inverted rate structure is expanded to include input services and capital goods, arguably as much as 2% to 3% of the top line can be liquidated and be invested back into business,” said Nimish Bhatia, partner, PwC.
The automated grant of a 90% refund within three working days from claim acknowledgement will provide significant liquidity to manufacturers as well as exporters.
The decision to broaden the refund framework for accumulated credits and rationalise provisions governing blocked input tax credit addresses one of the significant sources of working-capital blockage across sectors, said experts.
“By converting idle tax credits into productive capital, these reforms can support investments, capacity expansion and job creation,” said Sameer Gupta, national tax leader, EY India.
The reforms will be implemented from April 1, 2027, although the finance ministry has specified separate eligibility dates for certain refund provisions. These changes could benefit businesses across manufacturing, exports, e-commerce, hospitality, and logistics, while consumers may see indirect gains if lower compliance costs are passed on.
Gupta noted that alongside export-related relief, procedural simplification and decriminalisation measures, the recommendations augment tax certainty, reduce litigation and strengthen India’s competitiveness as a global investment destination.