How Will GST Reforms Enhance the Growth of Global Capability Centres in India?
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Synopsis
GST reforms are reshaping the landscape for Global Capability Centres in India. These changes promise to enhance competitiveness, streamline tax processes, and open new avenues for growth. Discover how these reforms will not only impact tax structures but also elevate India's position in the global market.
Key Takeaways
- GST reforms will enhance operations of Global Capability Centres.
- Removal of Section 13(8)(b) ensures services abroad are treated as exports.
- New avenues for growth through shifting intermediary functions to GCCs.
- Revised GST rates impact various goods and services.
- Faster, risk-based refunds will improve cash flow predictability.
New Delhi, Sep 7 (NationPress) The recent GST reforms are set to significantly enhance the operations of Global Capability Centres (GCCs) in India. These changes will not only involve tax modifications but also aim to improve their global competitiveness, cost structures, and cash flows, as highlighted in a report released on Sunday.
The latest GST Council meeting marked one of the most substantial tax reforms since 2017.
Previously, services rendered by GCCs to international affiliates were often classified as “intermediary,” which resulted in disputes, GST applicability on services, and the denial of export incentives, according to the report from Grant Thornton Bharat.
“With the removal of Section 13(8)(b) of the IGST Act, the determination of the place of supply for these services will now depend on the recipient's location. This change guarantees that services provided abroad will be recognized as exports, making them eligible for zero-rating and ITC refunds,” the report stated.
This amendment is expected to foster greater certainty and competitiveness, potentially alleviating prolonged legal disputes. Furthermore, it will create new growth opportunities by shifting intermediary roles to Indian GCCs.
The Council has adjusted GST rates on various goods and services, including a reduction in rates for air conditioners and monitors, while increasing rates for passenger transport, motor vehicle rentals, and air transport services (excluding economy class).
“For GCCs, this results in both positive and negative implications depending on the nature of goods/services acquired and the eligibility for ITC,” the report noted.
Although there were existing provisions for sanctioning a 90 percent provisional refund, manual handling had hindered effective implementation.
“The introduction of risk-based identification and assessment of refund claims through an automated system may facilitate the effective application of these provisions. This process is set to commence on November 1, 2025. Quicker, risk-based refunds will alleviate working capital strains and enhance cash flow predictability,” the report concluded.
The number of Global Capability Centres in India is projected to rise from 1,700 to over 2,200 by 2030.
Point of View
It is imperative to acknowledge the positive trajectory that GST reforms are paving for Global Capability Centres in India. These changes not only address taxation complexities but also enhance India's competitive edge in the global market. It is a forward-thinking approach that aligns with the nation's growth ambitions.
NationPress
07/09/2025
Frequently Asked Questions
What are the key benefits of the GST reforms for GCCs?
The GST reforms enhance global competitiveness, streamline tax processes, and provide greater certainty for services rendered by GCCs, making them eligible for zero-rating and ITC refunds.
When will the new refund process be implemented?
The proposed risk-based identification and evaluation of refund claims is set to be operational from November 1, 2025.
