NATHEALTH lauds faster GST refund mechanism

New Delhi: NATHEALTH – The Healthcare Federation of India has welcomed the Government of India’s recent move to expedite GST refunds for exporters and manufacturers, calling it a pragmatic reform that will improve liquidity and enhance the ease of doing business in India.

The Central Board of Indirect Taxes and Customs (CBIC) has announced that 90% of the refund amount will now be released upfront in all low-risk cases, significantly reducing delays and improving cash flow for industry players. The new mechanism applies to both export-related and inverted duty structure (IDS) refund claims – where taxes on inputs are higher than those on finished goods.

Himanshu Baid, Vice President, NATHEALTH and Managing Director, Poly Medicure Ltd., commended the step – “This is a progressive and much-needed initiative by the Ministry of Finance and CBIC. Timely GST refunds have been a long-standing request from industry, and this move will greatly ease working-capital pressures, especially for MSMEs. By improving liquidity and ensuring predictability in cash flows, the government is enabling Indian manufacturers to reinvest in innovation, quality, and capacity expansion.”

He further added, the medical device industry has experienced challenges due to the inverted duty structure, where raw materials and components attract higher GST rates compared to finished devices. The faster refund mechanism is a constructive step that will help ease these challenges and further enhance India’s competitiveness as a global MedTech manufacturing hub.

As part of the new framework, tax officials are now required to record written reasons in cases where the provisional 90% refund is not granted – a step that will improve transparency, accountability, and consistency in the refund process.

The principle of GST is tax neutrality – to ensure businesses are taxed on value addition, not on their working capital. However, industries operating under an inverted duty structure often accumulate large amounts of unutilized Input Tax Credit (ITC), restricting liquidity. By accelerating refunds, the government is helping manufacturers reduce borrowing costs, stabilize operations, and improve their ability to compete globally.

NATHEALTH emphasized that while this reform marks an important milestone, the next phase of GST evolution should also include input services and capital goods within the refund process to achieve full tax neutrality.

We request that refunds of ITC paid on rentals, logistics, warehousing, testing, and quality assurance services be considered to ensure full tax neutrality. We also request that refunds or phased credits of ITC on machinery and equipment be enabled, acknowledging their capital-intensive nature and critical role in manufacturing.

NATHEALTH extended its appreciation to the Finance Ministry, GST Council, and CBIC for taking a responsive, industry-aligned approach that supports India’s growing healthcare manufacturing sector.

Such policy reforms demonstrate the government’s commitment to trust-based governance and the ‘Make in India’ mission,” said Mr. Baid. “They give a much-needed fillip to domestic manufacturing and move us closer to realizing India’s aspiration of becoming a global MedTech leader by 2047.

With this reform, India takes another decisive step toward building a transparent, efficient, and future-ready tax ecosystem – one that supports growth, innovation, and self-reliance across the healthcare and medical device value chain.