Healthcare industry welcomes faster GST refunds, seeks broader reform
Mumbai, Oct 13, 2025
The Central Board of Indirect Taxes and Customs (CBIC) recently announced that 90 per cent of GST refunds will now be released upfront for low-risk taxpayers
India’s healthcare and medical device industry has welcomed the government’s latest move to fast-track GST refunds, but at the same time requested that the next big step must be to extend refund eligibility to input services and capital goods essential for achieving full tax neutrality and easing liquidity challenges faced by manufacturers.
The Central Board of Indirect Taxes and Customs (CBIC) recently announced that 90 per cent of GST refunds will now be released upfront for low-risk taxpayers, covering both export-related and inverted duty structure (IDS) cases. The decision, hailed as a pragmatic and trust-based reform, is expected to significantly improve cash flow for exporters and manufacturers.
While the move addresses long-standing concerns over delayed refunds, industry leaders stress that GST 2.0 must go further to include refunds of input tax credit (ITC) paid on rentals, logistics, warehousing, testing, quality assurance, and other essential services, along with machinery and equipment used in manufacturing.
“The new refund mechanism is a welcome relief, especially for MSMEs. However, for true GST neutrality, refunds of ITC on input services and capital goods must be enabled,” said Himanshu Baid, vice-president, Nathealth, and managing director, Poly Medicure.
“Manufacturers invest heavily in infrastructure, testing, and logistics — all of which attract 18 per cent GST. Allowing refunds or phased credits for these will ease working capital pressure and enable reinvestment in innovation and capacity expansion,” he added.
Rajiv Nath, forum coordinator, Association of Indian Medical Device Industry (AiMeD), said the government’s step marks “a major improvement in cash-flow efficiency,” but must now evolve into a comprehensive refund framework covering the full manufacturing value chain.
“The next step should include refunds on input services and capital goods. Modern manufacturing relies heavily on machinery, rentals, and specialised services; excluding these from refund eligibility limits the benefits of GST reform,” Nath noted.
Both AiMeD and Nathealth highlighted that the inverted duty structure, where raw materials and components are taxed at 18 per cent while finished medical devices attract 5 per cent, continues to create large unutilised ITC balances. Faster and more inclusive refunds, they said, will help strengthen India’s competitiveness as a global MedTech manufacturing hub.
Under the new directive, tax officers must now record written reasons when withholding the 90 per cent provisional refund — a measure that enhances transparency and consistency in tax administration.
Industry bodies expressed gratitude to the finance ministry, GST Council, and CBIC for their consultative approach and urged that the next phase of reforms should align with GST’s founding principle — tax the value added, not the working capital.
“With timely refunds, expanded eligibility, and a transparent process, India can unlock greater investment, employment, and export potential in the healthcare manufacturing sector,” said Baid.
[The Business Standard]
