GST Council to examine input tax credit relief for key sectors

India's GST Council is poised to consider a package of input tax credit (ITC) relief measures aimed at easing the tax burden on several labour-intensive sectors that have struggled with compliance complexity and operational costs.

Among the proposals under consideration are provisions to grant ITC on pipeline infrastructure and telecom tower installations, which currently operate under restrictive credit regimes. The Council is also examining how contracted service prices between government-owned enterprises can be better aligned with ITC eligibility criteria, potentially streamlining procurement processes.

The hospitality, tourism and wellness sectors are expected to benefit from broader ITC allowances on a wider range of inputs and services. These industries have long advocated for relief measures to improve margins and competitiveness, particularly as the sector recovers from pandemic-related disruptions.

The real estate and construction sectors, which employ millions across India, would gain enhanced credit availability under the proposals. Real estate developers have argued that restricted ITC has increased project costs and reduced affordability, while construction firms face cash flow challenges due to the current credit limitations.

Formal deliberation on these proposals is anticipated at an upcoming GST Council meeting, where officials will evaluate revenue implications and implementation feasibility before any recommendations are finalized.