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The GST Council’s 57th meeting on 8 October 2026 recommended broader refunds of accumulated input tax credit (ITC), including new access for some input-services and capital-goods credits. The eligibility dates are staged: qualifying input services must be availed on or after 1 November 2026, while qualifying capital goods must be availed on or after 1 April 2027, with those refunds spread over 60 months. These are recommendations, not proof that every change is already in force. CITI’s MMF rate-rationalisation request was a separate, earlier 2025 textile-policy issue.
What the GST Council recommended on refunds
At its 57th meeting in New Delhi on 8 October 2026, the GST Council recommended changes intended to ease working-capital constraints and release credit that businesses cannot readily use. The measures include expanding refund eligibility in specified cases and automating more of the refund process. The Council’s announcement describes recommendations for legal and administrative changes; a business should not treat them as operative solely on the basis of the meeting announcement. See the Press Information Bureau release on the 57th GST Council meeting and check the relevant notifications and GST portal instructions for implementation.
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Which accumulated ITC could qualify, and when
An inverted-duty situation occurs when tax paid on inputs is higher than tax charged on the output. That mismatch can leave a business accumulating ITC it cannot use quickly. The Council recommended widening refunds in specific inverted-duty and zero-rated-supply cases, with eligibility depending on the type of credit and when it was availed.
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| Credit category | Refund context recommended | Credit-availment date | Timing treatment |
|---|---|---|---|
| Input-services ITC | Inverted-duty cases | Input services availed on or after 1 November 2026 | No 60-month spread is specified for this category in the Council’s announcement. |
| Capital-goods ITC | Inverted-duty and zero-rated-supply refund cases | Qualifying capital goods availed on or after 1 April 2027 | Refunds would be spread over 60 months. |
The dates refer to when the relevant input service or capital good was availed, not a general date on which all old accumulated credit becomes refundable. The Council recommended amending the CGST Act and rules to implement these provisions. Businesses should confirm the enacted wording and any applicable conditions before including these credits in a claim.
How the proposed automated refund process would work
The Council also recommended a more automated route for eligible refunds. The proposed design includes risk-based sanction of 90% of eligible claims without officer intervention, shorter acknowledgement and processing timelines, and automatic refunds of excess balances in the electronic cash ledger. The 90% figure is the proposed share to be sanctioned, not a measured approval rate or a guarantee for an individual claim.
Because the announcement does not establish that the process is live for every claimant, check the operative notification and current GST portal workflow before relying on a processing deadline or assuming that a refund will be issued automatically.
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CITI’s MMF rate request and the 2025 rate outcome
CITI’s request and the later rate change are distinct from the 2026 refund recommendations. Before the GST Council meeting of 3–4 September 2025, CITI sought a uniform 5% GST rate across cotton, man-made fibre (MMF), and blended textile products. It also sought a 5% rate for textile machinery that was then taxed at 12% or 18%. That was an industry request, not the policy outcome. The request was reported by Apparel Views.
In a circular dated 4 September 2025, CITI reported that the Council had reduced the rate on MMF fibre from 18% to 5% and on MMF filament and yarn from 12% to 5%, effective 22 September 2025. CITI described the change as addressing an inverted-duty issue in the MMF textile value chain and supporting fibre neutrality. The reported adopted changes cover those specified MMF categories; they do not establish that the Council adopted CITI’s broader request for cotton, blends, or textile machinery. CITI’s account is available in its 4 September 2025 circular.
The circular also recapped earlier refund measures, including provisional sanction of 90% of inverted-duty refunds and a change to an export-refund threshold. Those earlier measures are context, not the new 2026 recommendations on input-services and capital-goods ITC. For a particular product, the applicable rate depends on its classification and the operative government rate schedule; a summary circular is not a substitute for checking the HSN-specific treatment.
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What businesses should verify before making a claim
- Classify the credit. Establish whether it is for an input service or capital good, and whether the claim relates to inverted duty or a qualifying zero-rated supply.
- Check the availed date. The Council’s recommended start dates are 1 November 2026 for eligible input-services credit in inverted-duty cases and 1 April 2027 for eligible capital-goods credit in the specified cases.
- Confirm implementation. Check the applicable CGST Act and rules amendments, notifications, and current GST portal procedure rather than relying on the Council announcement alone.
- Verify product rates by classification. For textile goods or machinery, confirm the HSN-specific rate in the operative government schedule; do not infer a product’s rate from CITI’s summary of the 2025 changes.
- Get transaction-specific advice. A qualified GST adviser can assess the records, classification, and conditions relevant to a particular refund or rate treatment.
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