TL;DR
The 57th GST Council meeting has approved reforms to boost India's automotive manufacturing and exports by improving liquidity, easing input tax credit restrictions, and providing a specific GST option for EV passenger transport.
India's automotive manufacturing sector is poised to benefit significantly from the 57th GST Council meeting's approved reforms. These reforms, focusing on process efficiency, liquidity, and ease of doing business, aim to improve working capital, relax input tax credit restrictions, accelerate refunds, streamline interstate movement of goods, and bolster export competitiveness. Crucially, the Council has not introduced any new GST rate changes for passenger vehicles.
One of the most impactful changes is the proposed expansion of refunds under the inverted duty structure, allowing refunds of accumulated input tax credit related to input services from November 1, 2026. This measure is designed to reduce working-capital constraints and unblock accumulated credits, which is particularly beneficial for companies investing in new EV plants, battery production, and export-oriented manufacturing. Additionally, the Council has introduced a specific GST option for EV passenger transport and rental services, permitting a 5% GST with restricted input tax credit when the vehicle is supplied with an operator and charging costs are included. This move is expected to bring greater clarity for EV fleet operators and mobility companies.
