India’s latest GST reforms are set to provide a major boost to Global Capability Centres (GCCs), improving operational clarity, financial efficiency, and international competitiveness. According to a report by Grant Thornton Bharat, the tax changes go beyond compliance adjustments and are expected to positively influence cost structures and cash flows for GCC operations across the country.
The 56th GST Council meeting introduced one of the most significant tax reforms since 2017. Earlier, services provided by GCCs to overseas affiliates were often at risk of being classified as “intermediary,” leading to disputes, GST liabilities, and denial of export-related benefits.
“With the omission of Section 13(8)(b) of the IGST Act, the place of supply for such services will now be determined by the location of the recipient. This ensures that services delivered abroad are treated as exports, eligible for zero-rating and ITC refunds,” the report stated.
The amendment is expected to reduce litigation, create regulatory certainty, and enhance India’s attractiveness as a GCC destination. It may also enable companies to shift more intermediary functions to Indian centres, opening new growth opportunities.
The Council also revised GST rates across multiple goods and services. Rates have been reduced on air conditioners and monitors, while rates have increased on passenger transport, motor vehicle rentals, and air transport services excluding economy class.
“For GCCs, this translates into both positive and negative impacts depending on the nature of goods/services procured, along with the eligibility of ITC,” the report mentioned.
Refund mechanisms are also expected to improve. Although provisions allowing 90% provisional refunds already existed, manual intervention slowed implementation. The introduction of risk-based identification and evaluation of refund claims aims to streamline the process.
“With the proposed risk-based identification and evaluation of refund claims through the system, effective implementation of these provisions may now be possible. This process will be operational from November 1, 2025. Faster, risk-based refunds will ease working capital pressure and improve cash flow predictability,” the report noted.
India’s GCC landscape is projected to expand significantly, with the number of centres expected to grow from 1,700 to over 2,200 by 2030.
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