57th GST Council Proposes Refund of Accumulated ITC on Capital Goods and Input Services

The 57th Meeting of the GST Council was held on October 08, 2026, in New Delhi, under the chairpersonship of the Union Finance & Corporate Affairs Minister, Smt. Nirmala Sitharaman. At the meeting, the GST Council made recommendations relating to process reforms, primarily covering registration, returns, refunds and adjudication; clarifications regarding the applicability of GST on supplies of certain goods and services; and other measures for trade facilitation and streamlining GST compliances.

Refund of accumulated ITC on account of capital goods and input services: The Council recommended amendment in clause (ii) of proviso to section 54(3) of the CGST Act, 2017, and in the CGST Rules, 2017, to provide for refund of accumulated ITC on account of capital goods in case of refund pertaining to zero-rate supplies, and of accumulated ITC on account of input services and capital goods in case of refund pertaining to inverted duty structure.

The Council recommended that the refund of accumulated ITC on input services for refunds pertaining to inverted duty structure shall be available in respect of ITC availed on input services on or after 1st November, 2026.

In respect of refund of ITC on capital goods in refunds pertaining to zero rated supplies and inverted duty structure, the Council recommended that refund of ITC on capital goods will be spread over 60 months, and shall be available in respect of ITC availed on capital goods on or after 1st April, 2027.

This will ease working capital constraints for taxpayers and remove blockage of ITC on account of input services and capital goods in such cases.

The Press Release can be accessed at:  https://www.pib.gov.in/PressReleaseDetail.aspx?PRID=2320934&reg=48&lang=1