The 56th GST Council meeting has delivered one of the most sweeping tax overhauls since 2017.
Earlier, services by GCCs to overseas affiliates often faced the risk of “intermediary” classification, leading to disputes, GST taxability on services and denial of export benefits, according to the report by Grant Thornton Bharat.
“With the omission of Section 13(8)(b) of the IGST Act, place of supply for such services will now be determined by location of the recipient. This ensures that the services delivered abroad are treated as exports, eligible for zero-rating and ITC refunds,” the report informed.
The amendment will lead to greater certainty, competitiveness and may grant relief from prolonged litigation. Further, it will also provide new avenues for growth by transitioning intermediary functions to the Indian GCCs,
The Council has revised GST rates on several goods and services. Reduction in rates on air conditioners, monitors and increase in rates on passenger transport /renting of motor vehicles and air transport services (except for economy class).
“For GCCs, this translates into both a positive as well as negative impact depending on the nature of goods/ services procured along with the eligibility of ITC,” the report mentioned.
Provisions related to sanctioning of 90 per cent refund on provisional basis were already present; however, due to manual interventions, the implementation was not effective.
“With the proposed risk-based identification and evaluation of refund claims through system, it may enable effective implementation of the above provisions. This provision and process will be operationalised from November 1, 2025. Faster, risk-based refunds will ease working capital pressure and improve cash flow predictability,” the report noted.
The number of Global Capability Centres (GCC) in India are expected to increase from 1,700 to over 2,200 by 2030.