GST Reforms Set to Accelerate Growth of Global Capability Centres in India: Report

New Delhi – The latest Goods and Services Tax (GST) reforms are poised to strengthen the operations of Global Capability Centres (GCCs) in India, not only through tax adjustments but also by enhancing competitiveness, cost efficiency, and cash flow management, according to a report by Grant Thornton Bharat.

The recently concluded 56th GST Council meeting has introduced one of the most significant tax overhauls since 2017.

Previously, services provided by GCCs to overseas affiliates risked being classified as “intermediary” services—leading to tax disputes, GST applicability, and denial of export benefits. With the removal of Section 13(8)(b) of the IGST Act, the place of supply for such services will now be determined by the recipient’s location. This means services delivered abroad will qualify as exports, eligible for zero-rating and ITC refunds.

“This amendment will create greater certainty, boost competitiveness, reduce litigation, and open new growth opportunities by enabling intermediary functions to be transitioned to Indian GCCs,” the report stated.

The Council also revised GST rates on multiple goods and services—cutting rates on air conditioners and monitors, while increasing rates on passenger transport, rental of motor vehicles, and certain air travel services (excluding economy class). For GCCs, the impact will vary depending on the nature of goods or services purchased and the availability of input tax credit (ITC).

Another key change addresses refund delays. While provisions for sanctioning 90% provisional refunds existed earlier, manual processes hindered their effectiveness. Starting November 1, 2025, a new risk-based system will automate the identification and evaluation of refund claims. Faster, technology-driven refunds are expected to ease working capital pressures and improve cash flow predictability.

According to the report, the number of Global Capability Centres in India is projected to grow from 1,700 to over 2,200 by 2030.

With inputs from IANS