GST Council Simplifies Refunds for Low-Value E-Commerce Exports; MSMEs to Benefit

The GST Council has approved a landmark reform that removes the value threshold for GST refunds on low-value exports, bringing long-awaited relief to small and e-commerce exporters. The change, to be incorporated through an amendment to the CGST Act, 2017, will allow refunds on all exports made with payment of tax—regardless of shipment value.

Why It Matters:

Until now, exporters sending goods through courier or postal services faced restrictions that limited refunds on smaller consignments. The reform is expected to improve cash flow, cut compliance burdens, and strengthen India’s e-commerce export ecosystem, according to the Commerce Ministry.

Sectoral Impact:

Alongside the refund reform, the government has rolled out sweeping GST rate rationalisation across multiple industries:

📦 Packaging, textiles, leather, wood: GST cut from 12–18% to 5%, reducing production costs.

🚚 Commercial vehicles, trucks, and delivery vans: GST reduced from 28% to 18%, lowering logistics costs.

🧸 Toys and sports goods: GST dropped from 12% to 5%, encouraging domestic production and countering imports.

🌱 Eco-friendly products (bamboo, bagasse, jute boards): Lower GST ensures sustainability while improving cash flow.

Industry Response:

Exporters and industry associations hailed the decision, highlighting that faster refunds and reduced rates will unlock working capital, ease liquidity pressure, and correct distortions like the inverted duty structure in textiles and food processing.

Wider Impact on MSMEs:

💡 Better cash flow and reduced compliance overheads.

📈 Stronger supply chains and improved global competitiveness.

🌍 Boost to India’s goal of becoming a manufacturing hub for textiles, tractors, auto components, handicrafts, and processed food.

🛒 Greater participation of MSMEs and small sellers in international e-commerce.

Looking Ahead:

Experts say these measures will not only strengthen “Vocal for Local” but also ensure cost benefits trickle down to consumers, reduce inflationary pressures, and align Indian exports with global sustainability standards.