GST Refund on Domestic Machinery Purchase for 100% EOU Units

Author: Paras Nagpal
Role: Business Consultant, GetMyCA

Reviewed by: GetMyCA Export & Compliance Advisory Team
Last Reviewed: August 2026

If your company is a 100% Export Oriented Unit (EOU) and is planning to purchase machinery from an Indian supplier, there may be an important GST benefit that should be evaluated before the purchase is completed.

Eligible domestic supplies of goods to a 100% EOU can fall within the deemed export framework under GST. Therefore, GST paid on qualifying domestic machinery procurement may be eligible for refund, subject to the prescribed conditions, approvals and documentation.

This can be especially valuable for manufacturing EOUs making substantial investments in new machinery, production lines, automation or capacity expansion.

GetMyCA helps 100% EOU units evaluate GST refund eligibility on domestic machinery purchases and assists with the necessary refund and compliance support.

Can a 100% EOU Get GST Refund on Machinery Purchased from an Indian Supplier?

Yes, an eligible 100% EOU purchasing qualifying machinery or goods from a registered domestic supplier may have a GST refund opportunity under the deemed export provisions, subject to applicable conditions.

This is particularly relevant where the EOU is purchasing machinery required for its approved manufacturing or operational activities.

For example, a 100% EOU may be planning to purchase:

• Manufacturing machinery
• Production-line equipment
• Packaging machinery
• Processing equipment
• Automation systems
• Testing equipment
• Quality-control machinery
• Plant equipment
• New production lines
• Machinery for capacity expansion
• Machinery for technology upgradation

Instead of considering the GST paid on these purchases simply as a normal cost or accumulated credit, an EOU should first evaluate whether the transaction can qualify for the available deemed export GST refund mechanism.

GST Refund on Domestic Machinery Purchase Can Be a Significant Benefit

Machinery purchases are generally high-value transactions.

Even a single machinery purchase can involve GST running into several lakhs or crores of rupees.

Consider an illustrative example:

Figures are illustrative. Actual GST rate and refund eligibility depend upon the machinery, classification and facts of the transaction.

For a 100% EOU investing ₹5 crore in domestic machinery, for example, an 18% GST component would represent ₹90 lakh.

That is why the GST treatment of machinery should ideally be reviewed before the purchase is completed.

Buying Machinery Domestically? Your EOU Status Matters

A common assumption among exporters is that major tax benefits on machinery are available primarily when machinery is imported.

However, domestic machinery purchases should not be ignored.

A 100% EOU purchasing eligible goods from a Domestic Tariff Area supplier operates under a specific regulatory framework. Qualifying supplies to EOUs have been recognised under GST as deemed exports.

Therefore, if your EOU is purchasing a machine from an Indian manufacturer, the transaction should be evaluated separately instead of being treated as an ordinary domestic machinery purchase.

The EOU status can make a significant difference to the available GST treatment.

What Does “Domestic Machinery Purchase” Mean for a 100% EOU?

For this purpose, domestic machinery procurement generally refers to machinery being purchased by the EOU from an Indian registered supplier or manufacturer, rather than machinery being imported from outside India.

For example:

A pharmaceutical EOU in India purchases a new production machine from an Indian machinery manufacturer.

Or:

An engineering EOU purchases an automated manufacturing line from a domestic equipment supplier.

Or:

An export-oriented manufacturing company purchases packaging and processing equipment from Indian vendors.

These transactions can involve substantial GST.

For eligible procurements, the EOU should examine whether the domestic supply falls within the relevant deemed export provisions and whether a GST refund can consequently be claimed.

100% EOU GST Refund vs EPCG Machinery GST Refund

This distinction is extremely important.

Manufacturers often hear about GST refund on domestic machinery under EPCG and assume that EPCG is required whenever they want to obtain a GST benefit on machinery.

That is not always the case.

A business that is already operating as a 100% EOU has a separate framework applicable to eligible domestic procurement.

Domestic Machinery Purchase Comparison

Therefore:

If you are already a 100% EOU, do not assume that EPCG is the only route for obtaining a GST benefit on domestic machinery.

The proposed machinery purchase should first be examined under the EOU framework.

Why Should a 100% EOU Review GST Before Purchasing Machinery?

The biggest mistake is often checking the GST refund possibility after the machinery has already been purchased and invoiced.

A machinery transaction can involve:

• Purchase order
• Supplier documentation
• EOU approvals
• GST invoice
• Machinery description
• Applicable GST rate
• Procurement documentation
• Receipt of machinery
• EOU records
• Refund-related declarations

Some of these aspects can become relevant to the refund position.

Therefore, a company planning substantial CAPEX should get the proposed transaction reviewed before finalising the purchase.

For GetMyCA clients, our recommended approach is simple:

Before buying any major machinery from an Indian supplier, first check whether your 100% EOU can avail the applicable GST refund benefit.

Can GST Refund Be Claimed on Capital Goods Purchased by a 100% EOU?

Eligible domestic supplies of goods to a qualifying EOU can fall within the notified deemed export framework.

Accordingly, qualifying machinery and capital goods required for the EOU's approved activities should be evaluated for the available GST refund treatment.

However, the fact that an asset is called “machinery” or “capital goods” by itself does not automatically establish refund eligibility.

The transaction needs to be reviewed considering:

• EOU status
• Approved operations
• Nature of machinery
• Supplier
• Purpose of procurement
• GST treatment
• Regulatory documentation
• Applicable conditions

GetMyCA reviews these factors before advising whether the proposed machinery procurement should be considered for the EOU deemed export refund route.

Which 100% EOUs Should Check Machinery GST Refund Eligibility?

The opportunity can be particularly relevant for manufacturing EOUs undertaking large capital expenditure.

For example:

Pharmaceutical EOUs

Purchasing manufacturing, filling, packaging, processing, laboratory or production machinery domestically.

Medical Device EOUs

Purchasing manufacturing lines, assembly machinery, moulding equipment, sterilisation-related equipment and testing machinery.

Textile and Garment EOUs

Purchasing weaving, knitting, processing, dyeing, finishing or garment manufacturing equipment.

Footwear EOUs

Purchasing moulding, sole manufacturing, injection moulding, stitching, finishing or assembly machinery.

Engineering EOUs

Purchasing CNC machines, fabrication equipment, precision machinery, automation systems or specialised production equipment.

Electronics EOUs

Purchasing assembly lines, testing systems, production equipment and automation machinery.

Chemical and Processing EOUs

Purchasing reactors, processing equipment, blending systems, filling lines and related plant machinery.

The particular industry is not the deciding factor.

The key question is whether the machinery and transaction qualify under the applicable EOU and GST provisions.

Planning Expansion of Your 100% EOU?

Expansion is one of the situations where this benefit can become particularly significant.

Suppose a 100% EOU is planning:

• A new manufacturing line
• Capacity enhancement
• Plant modernisation
• Automation
• Technology upgradation
• Replacement of production equipment
• Additional manufacturing facility
• New packaging line
• Additional quality-control equipment

The company may purchase several machines from multiple Indian suppliers.

Collectively, these purchases may involve crores of rupees of GST.

In such cases, GST should be considered as part of the CAPEX planning exercise, instead of being reviewed after all machinery invoices have already been issued.

Is GST Refund Automatic for Every Machinery Purchase by an EOU?

No.

This is important.

Being registered or approved as a 100% EOU does not mean that every domestic purchase automatically becomes refundable.

Eligibility depends upon applicable legal conditions and the facts of the transaction.

The machinery, approved activity, procurement arrangement and supporting documentation should therefore be checked.

That is why GetMyCA recommends an eligibility review before machinery procurement rather than assuming that a refund will automatically be available.

How GetMyCA Helps 100% EOUs Claim GST Refund on Domestic Machinery

GetMyCA works with manufacturers and exporters on GST refunds and machinery-related export incentive matters.

For a 100% EOU purchasing machinery domestically, we can assist with:

GST Refund Eligibility Review

We evaluate whether the proposed domestic machinery procurement may fall within the applicable deemed export framework.

EOU and Machinery Review

We examine the EOU status, approved activity and proposed machinery to identify the appropriate GST position.

Pre-Purchase Planning

Where the machinery has not yet been purchased, we review the transaction before the purchase order and invoice are finalised.

Documentation Support

We assist in reviewing and preparing the documentation required to support the eligible refund position.

GST Refund Application Assistance

For qualifying cases, GetMyCA assists with the applicable GST refund claim and supporting documentation.

Department Query Assistance

Where the GST authorities seek clarification or additional documents, our team can assist with the response and supporting submissions.

Already Received a Machinery Quotation? Get It Reviewed Before Purchase

If your 100% EOU has already received a quotation from an Indian machinery supplier but the transaction has not yet been completed, this may be the right stage to review the GST implications.

For example:

Machine Price: ₹3 Crore
GST @18%: ₹54 Lakh

Before treating the ₹54 lakh merely as GST payable on the machinery, the EOU should determine whether the proposed transaction can qualify under the applicable deemed export refund provisions.

A review before purchase can help ensure that the company understands the benefit and associated compliance requirements at the correct stage.

Frequently Asked Questions

Can a 100% EOU Claim GST Refund on Domestic Machinery Purchase?

Eligible domestic supplies of goods to a qualifying 100% EOU can fall under the GST deemed export framework. Consequently, GST refund may be available on qualifying machinery procurement subject to applicable conditions and documentation.

Can a 100% EOU Get GST Refund When Buying Machinery from an Indian Supplier?

Potentially yes. Where the domestic procurement satisfies the applicable EOU and GST conditions, the GST paid on qualifying machinery supplied by an Indian registered supplier may be considered for deemed export refund.

Is EPCG Required for a 100% EOU to Get GST Refund on Machinery?

Not necessarily. An existing 100% EOU has its own regulatory framework for eligible procurement. The EOU route should therefore be examined independently before considering whether EPCG is relevant.

Is GST Refund Available on Capital Goods for an EOU?

Eligible supplies of goods to an EOU may qualify under the deemed export provisions. Machinery and capital goods should be reviewed based on their use, approved operations and applicable conditions.

Can GST Refund Be Claimed on Machinery Purchased for EOU Expansion?

It may be possible where the machinery purchase satisfies the prescribed eligibility and documentation requirements. Expansion-related machinery should therefore be reviewed before procurement.

Can Every 100% EOU Automatically Claim Machinery GST Refund?

No. EOU status alone does not make every machinery transaction eligible. The machinery, approved activities, supplier and applicable conditions need to be reviewed.

When Should We Contact GetMyCA?

Ideally, contact GetMyCA before issuing the final purchase order or completing the machinery purchase. This allows the proposed transaction and refund eligibility to be evaluated at the appropriate stage.

Purchasing Domestic Machinery for Your 100% EOU? Check Your GST Refund Eligibility

If your business operates as a 100% Export Oriented Unit and is planning to purchase machinery from an Indian supplier, do not overlook the GST component of the investment.

A machinery purchase worth several crores can involve a significant amount of GST.

Eligible domestic machinery procurement by a 100% EOU may qualify for a GST refund under the applicable deemed export provisions, subject to prescribed conditions.

GetMyCA helps 100% EOUs evaluate domestic machinery purchases, determine GST refund eligibility and assist with eligible refund claims and related documentation.

Before Buying Machinery, Speak With GetMyCA

Planning a new machine, production line, expansion or technology upgrade?

Contact GetMyCA before finalising the purchase order or machinery invoice to check whether your 100% EOU can claim the applicable GST refund benefit.

GetMyCA – Grow Wisely

About the Author

Paras Nagpal
Business Consultant, GetMyCA - advising businesses on GST, export compliance and DGFT matters since 2015.
Email: paras@getmyca.com | Phone: +91 92174 87001

About GetMyCA

GetMyCA Consultants Private Limited is a business consulting firm based in New Delhi, supporting clients across India with registrations, tax and GST compliance, export documentation, subsidy advisory and related regulatory services.

Our Services: GST Registration & Compliance, Company Registration, Tax Consulting, Accounting Services, Business Compliance, FSSAI Licensing, MSME Registration, GST Refund Solutions, EPCG consultancy and DGFT support.

Office: NS-21, LGF, Mianwali Nagar, Near Peeragarhi Metro Station, New Delhi - 110087

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