Recommendations of the 57th GST Council Meeting

Held on October 8, 2026, New Delhi | Chaired by Union Finance Minister Smt. Nirmala Sitharaman[cite: 5]

Major Highlights at a Glance

• Complete removal of arrest provisions under GST[cite: 5].
• Prosecution threshold raised significantly from ₹1 crore to ₹5 crore[cite: 5].
• General penalty amount reduced from ₹25,000 to ₹10,000[cite: 5].
• In-principle approval for an optional scheme for small B2C businesses with turnover up to ₹5 crore[cite: 5].
• Simplified registration for small sellers on e-commerce platforms[cite: 5].

A. Core Process Reforms

1. Registration Enhancements

• FORM GST REG-01 will be amended to include drop boxes for document selection, providing clarity to both taxpayers and officers[cite: 6].
• Amendments to all registration particulars, except the Principal Place of Business (PPOB), will now be accepted automatically on the portal[cite: 6].
• Applications for registration cancellation (FORM GST REG-16) will be accepted automatically by the system once pending returns are filed and dues are paid[cite: 7].
• Small suppliers making supplies through Electronic Commerce Operators (ECOs) can now register simply by declaring the ECO's warehouse as their PPOB, provided they do not pass on ITC exceeding ₹2.5 lakh per month[cite: 7, 8].

2. Return & ITC Adjustments

• An "Electronic Statement of tax paid on Reverse charge basis and input tax credit claimed" facility will be introduced to facilitate accurate reporting[cite: 8].
• An Invoice Management System (IMS) will allow a recipient to accept, reject, or keep pending a document pertaining to inward supply for generating the GSTR-2B ITC statement[cite: 8].
• Provisions for these alternate mechanisms for amending liability and ITC in returns are targeted to come into force from the return of April 2027[cite: 9].

3. Faster Automated Refunds

• Phase 1 automation will sanction full refund claims of excess electronic cash ledger balances automatically without officer intervention[cite: 9].
• The time limit for issuing an acknowledgment or deficiency memo is reduced to 10 days, after which it will be deemed acknowledged by the system[cite: 9].
• For zero-rated supplies and inverted duty structures, 90% of the claimed amount will be sanctioned provisionally by the system based on risk evaluation[cite: 9].
• The ₹1,000 threshold for refunds will apply to the combined total amount (CGST, SGST/UTGST, and IGST taken together)[cite: 10].

4. Dispute Resolution & Litigation

• A minimum threshold of ₹10,000 (total tax) has been set; no show cause notices will be issued for tax amounts below this limit[cite: 10, 11].
• In non-fraud cases, a reduced penalty of 5% will apply if the tax and interest are paid within 30 days (under section 73) or 60 days (under section 74A) of the adjudication order[cite: 11].
• An upper pre-deposit limit of ₹40 crore has been set for filing an appeal in cases where the order involves only a penalty and no tax demand[cite: 11].

B. ITC, Exports, and Ease of Doing Business

Input Tax Credit (ITC)

• Restrictions are removed on claiming ITC for outdoor catering, health/life insurance, telecom towers, pipelines outside factories, free samples, and expired goods[cite: 11, 12].
• Refunds of accumulated ITC on capital goods will be spread over 60 months, applying to ITC availed on or after April 1, 2027[cite: 11].

Export Facilitation

• The condition requiring supplier and recipient not to be establishments of a distinct person has been removed for qualifying as an "export of services"[cite: 12].
• Deliveries to overseas buyers made within an SEZ/FTWZ (paid in permitted foreign exchange/INR) are deemed supplies to an SEZ/FTWZ[cite: 12].

Arrest, Prosecution & E-way Bills

• Arrest powers under GST are completely withdrawn by omitting section 69 of the CGST Act[cite: 12].
• Conveyances carrying goods can now only be intercepted on specific intelligence, requiring authorization from an officer not below the rank of Joint Commissioner[cite: 13].
• Interception is prohibited in transit States; inspection can only occur where the supplier or recipient is located/registered[cite: 13].
• Late fees for delayed returns are waived for taxpayers with up to ₹5 crore annual turnover, provided the return is filed by the end of its due month[cite: 14].
• An optional Annual Return Quarterly Payment (ARQP) scheme has been approved in-principle for B2C taxpayers with turnover up to ₹5 crore[cite: 14].

C. GST Rate Adjustments & Clarifications

Category	Decision / Clarification
Goods	Psyllium seeds (Isobgul/Isabgol) will have a NIL rate of GST, whether fresh, chilled, frozen, or dried[cite: 15]. Sublimation paper is clarified under heading 4809[cite: 15]. Retreaded tractor tyres are aligned with the GST rate applicable to new tractor tyres[cite: 16]. For second-hand vehicle margin scheme suppliers, ITC restrictions apply only to the procured vehicle, allowing ITC on spares, repairs, and marketing[cite: 15].
Services	An option to pay a 5% GST rate (with restricted ITC) is provided for passenger transport/rental services using electric vehicles where battery charging is included[cite: 16]. Passenger transportation by helicopter from/to airports/helipads in North-Eastern states, Sikkim, and Bagdogra on a seat-sharing basis is exempt[cite: 16, 17]. Storage or warehousing of seeds meant for sowing is exempt from GST[cite: 17]. Agricultural support services for curing coffee provided to cultivators are exempt[cite: 17]. Limited ITC is now allowed in the same line of business for restaurant/outdoor catering, hotel accommodations (up to ₹7500/day), and gym/fitness services[cite: 16].

Disclaimer: The recommendations of the GST Council outlined above will be formally given effect through relevant official circulars, notifications, and law amendments, which alone hold the force of law[cite: 18].