PHDCCI is reportedly urging changes to India’s GST input tax credit rules, including protection for eligible buyers when a supplier fails to deposit tax, changes to blocked credits, and easier movement of credit among GST registrations linked to one PAN. These are reported industry requests—not confirmed GST Council decisions or changes to current law.
What PHDCCI is reportedly asking for
A report published on 6 October 2026 says the PHD Chamber of Commerce and Industry (PHDCCI) wants amendments to the Central Goods and Services Tax (CGST) Act intended to reduce disputes and compliance burdens around input tax credit (ITC). The report is the available source for the details below; its page was not retrievable, and the available excerpt does not identify a named PHDCCI speaker. The India Looks report
A safe harbour when a supplier defaults
PHDCCI reportedly wants Section 16(2)(c) amended so a recipient can retain ITC when the supplier has not deposited the tax, provided the recipient holds a valid invoice, has received the supply, paid through banking channels, and did not collude in the default. The report says authorities should first seek recovery from the defaulting supplier.
This is a proposed safeguard for buyers acting in good faith, not a statement that those conditions currently guarantee credit under the law. The central policy question is how to protect compliant recipients without making it easier to claim credit on fraudulent or unsupported transactions.
Changes to blocked credits
The report says PHDCCI also seeks relaxation of Section 17(5), which blocks ITC for specified categories. The categories cited are motor vehicles, food and beverages, outdoor catering, beauty and health services, club memberships, and travel benefits. PHDCCI reportedly advocates allowing credit for business expenditure recorded in a taxpayer’s books.
That position should not be read as a general entitlement to claim ITC on those expenses under current law. The report describes an industry proposal to change the treatment of blocked credits.
Moving credit among registrations sharing a PAN
PHDCCI reportedly wants it to be easier to move credit between GST registrations associated with the same Permanent Account Number (PAN), particularly when one registration has accumulated credit because its output-tax liability is low. The report does not specify a transfer mechanism, so it is not possible to say what forms, limits, safeguards, or system changes the proposal might involve.
Have the requests been approved or enacted?
The available reporting does not establish that these requests were formally tabled at, discussed by, or accepted by the GST Council. Nor does it show that they have been enacted. Readers should treat them as reported proposals and check the latest Council decisions and current CGST provisions before relying on any change in ITC treatment.
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Past Council records provide context, not confirmation of these requests. A 2023 Council release described continuation of annual-return filing relief for taxpayers with aggregate turnover up to ₹2 crore for FY 2022-23, as well as clarification of ITC distribution through the Input Services Distributor mechanism. These were historical measures with their own dates and conditions. Goods and Services Tax Council, “Measures for facilitation of trade”
The Council’s agenda material for its 53rd meeting in 2024 also discussed legal proposals concerning GST, including ITC and tax demands. Agenda material documents proposals and discussion; it does not by itself establish enactment, and it does not confirm the PHDCCI requests reported in 2026. Goods and Services Tax Council, “53rd GST Council Meeting”
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Why the proposals matter to businesses
If adopted in some form, a supplier-default safe harbour could reduce the risk that a buyer loses credit because of a supplier’s failure, while placing greater emphasis on the buyer’s documentation and good-faith conduct. Any workable rule would need to balance that protection against safeguards against false claims.
Relaxing blocked-credit categories could change which business expenses qualify for credit, while a cross-registration transfer mechanism could affect how businesses manage accumulated credits. The practical impact would depend on the final legal wording, eligibility rules, and any administrative requirements. The report gives no estimate of expected savings, litigation reduction, or revenue effect.
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Quick Recap
What taxpayers should do now
- Do not treat the reported requests as a new rule or claim ITC solely on the basis of this report.
- Continue to apply the current CGST provisions and relevant guidance to supplier defaults, blocked credits, and separate GST registrations.
- Keep invoices, proof that supplies were received, payment records, and other transaction documents available to support any credit claim.
- Check official Council decisions and enacted legal changes before changing filing or credit-management practices.
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