The Indian Vegetable Oil Producers’ Association (IVPA) has urged the Government and the GST Council to lift the two-year-old restriction on refunds of accumulated Input Tax Credit (ITC) under the inverted duty structure, warning that the move has squeezed working capital for manufacturers and may fuel consumer inflation.
The industry body welcomed Prime Minister Narendra Modi’s call for next-generation GST reforms but cautioned that edible oil manufacturers, particularly MSMEs, continue to face viability concerns. “While edible oils attract 5 per cent GST, packaging, processing chemicals and other inputs are taxed at 12–18 per cent, leading to blocked credits that remain unrefunded since July 2022,” the association said.
According to the IVPA, the restriction has weakened cash flows, slowed investment in plant modernisation and import substitution, and risks pushing lower-income consumers toward unsafe, adulterated oils as costs get passed on.
The edible oil sector had earlier received ITC refunds under Section 54(3) of the CGST Act and Rule 89(5), with a 2019 circular explicitly allowing all input credits to be considered. The association argued that global practices endorse refunding accumulated credits to support competitiveness and domestic value addition.
Calling for parity with products such as butter and ghee, which continue to qualify for refunds, the IVPA said policy stability was critical for attracting fresh investment. With India’s edible oil demand projected to touch 30 million tonnes by 2030-31 and the market poised to grow at over 5 per cent annually, it said restoring refunds would strengthen food security and encourage long-term investment.
Source from: https://www.businessworld.in/article/restore-refunds-under-inverted-duty-structure-ivpa-to-gst-council-568477
