A major change for the services sector was the relief given for the export of services, by aligning the tax treatment under GST laws with the practice on ground. (File photo)The push for process reforms by the Goods and Services Tax (GST) Council’s recommendations on Thursday are set to have a wide-ranging impact on a number of segments of the economy, with the service sector key amongst them. Beyond the service sector, companies across the board will also benefit from quicker availability of input tax credit and refunds, which will help unlock working capital for them.The Council recommended amendments to Section 54(3) of the Central GST Act to provide for refund of accumulated input tax credit (ITC) on account of capital goods in case of refund pertaining to zero-rate supplies and for input services and capital goods under inverted duty structure. The ITC refund on capital goods will be spread over 60 months. While the change for capital goods will come into effect from April next year, that for input services can be availed from November 1, 2026, Finance Minister Nirmala Sitharaman said.“Including input services in inverted duty refunds from 1 November 2026, and plant and machinery from 1 April 2027, is a big step, and it will help fully achieve the objective of the recent rate rationalisation, which benefited consumers but left many businesses with accumulated credit,” Abhishek Jain, Indirect Tax National Head and Partner, KPMG in India, said. “Major sectors including FMCG, pharma and food will now be able to monetise this credit and free up working capital.”Another major change for the services sector was the relief given for the export of services, by aligning the tax treatment under GST laws with the practice on ground.This recommendation of the Council will help when billing is done through an overseas branch of a company. For instance, an Indian firm that serves a foreign client through its own branch abroad will get export benefits. The condition in the law that stood in the way is being removed, even though foreign exchange is received in the normal course, an official said. Analytics firms, design studios, engineering consultancies and the offices of global companies run from India will be covered under this. For contract manufacturing and processing, India is now placed on the same tax footing as competing locations, the official added.Citing the example of a testing laboratory which receives a prototype from a foreign client, tests it, sends back the report, and is paid in foreign exchange, an official explained that the place of supply followed where the work was performed. “It will now follow the location of the customer, and such work therefore qualifies as an export. This opens the whole field of testing, certification, repair, calibration, research, and analysis to export treatment, and India has substantial capacity in all of them.”While the GST Council’s meeting on Thursday did not discuss tax rate, it issued an important rate clarification for e-commerce operators, noting that the GST rate on delivery services provided by unregistered riders through e-commerce platforms will be 5%.Story continues below this ad“Platforms built on different commercial models have been reading the same provision differently, so the same delivery to the same customer has carried tax differently depending on how the platform arranges its contracts. The tax on a booking will turn on the service that is actually delivered. The same delivery will bear the same tax, whichever way it is routed,” an official explained.Aanchal Magazine is a Deputy Associate Editor with The Indian Express, serving as a leading voice on the macroeconomy and fiscal policy. With 15 years of newsroom experience, she is recognized for her ability to decode complex economic data and government policy for a wider audience. Expertise & Focus Areas: Magazine’s reporting is rooted in "fiscal arithmetic" and economic science. Her work provides critical insights into the financial health of the nation, focusing on: Macroeconomic Policy: Detailed tracking of GDP growth, inflation trends, and central bank policy actions. Fiscal Metrics: Analysis of taxation, revenue collection, and government spending. Labour & Society: Reporting on labour trends and the intersection of economic policy with employment. Her expertise lies in interpreting high-frequency economic indicators to explain the broader trajectory of the Indian economy. Personal Interests: Beyond the world of finance and statistics, Aanchal maintains a deep personal interest in the history of her homeland, Kashmir. In her spare time, she reads extensively about the region's culture and traditions and works to map the complex journeys of displacement associated with it. Find all stories by Aanchal Magazine here ... Read MoreSiddharth Upasani is a Deputy Associate Editor with The Indian Express. He reports primarily on data and the economy, looking for trends and changes in the former which paint a picture of the latter. Before The Indian Express, he worked at Moneycontrol and financial newswire Informist (previously called Cogencis). Outside of work, sports, fantasy football, and graphic novels keep him busy. ... Read More Tags:GST