New Delhi, October 10, 2025:
The Association of Indian Medical Device Industry (AiMeD) has welcomed the Government of India’s latest step to speed up GST refunds for exporters and manufacturers. The new system, announced by the Central Board of Indirect Taxes and Customs (CBIC), allows 90% of the refund amount to be released quickly in all low-risk cases.

This move will make it much easier for companies to get back their tax refunds without long delays. It applies to all refund applications filed on or after 1 October 2025 and covers both exports and inverted duty structure (IDS) cases, where the tax on raw materials is higher than the tax on the final product.

“This is a very welcome and practical step by the Finance Ministry and CBIC,” said Mr. Rajiv Nath, Forum Coordinator, AiMeD.
“Many Indian manufacturers, especially MSMEs, have experienced working-capital constraints as a result of delayed GST refunds. With the current approach of releasing 90% of refunds upfront for low-risk taxpayers, cash-flow challenges may be alleviated. “He explained.

Under the new instruction, if a tax officer decides not to give the 90% provisional refund, he or she must clearly record the reasons in writing. This will bring more transparency and fairness to the refund process.

The medical-device industry has been significantly impacted by the inverted duty structure, wherein inputs such as plastics and components are subject to an 18% GST, while finished medical devices—previously taxed at 12%, now incur a 5% rate. AiMeD has consistently raised concerns regarding this issue, advocating for expedited refunds and more equitable tax policies for reducing the rate of GST on inputs to avoid an inverted duty structure.”

Why the refund agenda matters

GST’s core principle is neutrality—tax the value added, not the working capital businesses need to operate. In categories where finished goods are at 5% while inputs and services are at 18%, accumulated Input Tax Credit (ITC) builds up quickly. Fast refunds change the game: lower borrowing costs, stronger cash flow, and more headroom for investment and exports.

Next Steps:

Mr. Nath emphasized that GST 2.0 should complete manufacturing by including input services and capital goods in the refund process. Modern supply chains rely on spending on technology, machinery, logistics, rentals, and specialized services.

Input services: Enable refunds of ITC paid at 18% on services like rentals, logistics, warehousing, quality assurance, and outsourced processes to maintain neutrality.

Capital goods: Allow refunds—or amortized refunds—of ITC on machinery and equipment, recognizing their long lifespan and capital intensity.

With these additions, the 90% upfront refund would be comprehensive and consistent with GST’s intended design.

Industry Response and Outlook

AiMeD expressed its gratitude to the Finance Minister, GST Council, and the Central Board of Indirect Taxes and Customs (CBIC) for taking significant steps to address longstanding concerns within the medical device sector. The association welcomed the move as a clear demonstration of the government’s commitment to trust-based governance, which is vital for fostering a positive business environment.

According to AiMeD, these policy measures are expected to instill greater confidence among stakeholders in the industry. By reducing working-capital constraints and streamlining the refund process, the reforms are anticipated to stimulate domestic manufacturing. This, in turn, supports the broader goal of enhancing India’s self-reliance in the medical device sector, with the aim of achieving substantial progress toward self-sufficiency by the year 2047.