57th GST Council Meeting – Key Recommendations
The GST Council, in its 57th meeting held on 8 October 2026 at New Delhi, has recommended major reforms to simplify registration, returns, refunds and adjudication, reduce litigation and penal consequences, improve the flow of input tax credit and clarify rates on certain goods and services.
Key Highlights
1. Registration
- Changes in registration particulars (other than principal place of business) to be approved automatically on the portal; for rule 14A taxpayers, all particulars including PPoB.
- Cancellation applied for by the taxpayer to be approved automatically once pending returns are filed and dues paid (in two phases).
- New rule 14B: small e-commerce sellers may register in another State by declaring the e-commerce operator's warehouse as their place of business (ITC up to ₹2.5 lakh per month).
- A circular and a document drop-down in FORM GST REG-01 to reduce queries and rejections of new applications.
2. Returns (from the April 2027 return period)
- New mechanism to align GSTR-1/1A/IFF with GSTR-3B and ITC in GSTR-3B with GSTR-2B (new rules 61(1A), 61(1B), 86C and 86D).
- Invoice Management System: conditions on keeping documents, including credit notes, pending (new rule 60(6A)).
- Draft mechanism to be released for public consultation before it is finalised.
3. Refunds
- Excess cash ledger balance to be refunded automatically; acknowledgement deemed if not issued within 10 days (currently 15).
- 90% provisional refund to be sanctioned automatically for zero-rated and inverted-duty claims, based on system risk assessment.
- Scanned uploads in RFD-01 dropped; the 1.5 times domestic value cap in rule 89(4)(C) removed.
- ₹1,000 minimum refund limit to apply to CGST, SGST and IGST together.
4. Notices, Penalties and Appeals
- No show cause notice where total tax involved is below ₹10,000; pending notices and appeals below this amount also covered.
- Penalty reduced to 5% in non-fraud cases if tax and interest are paid within 30 days (section 73) or 60 days (section 74A) of the order.
- Maximum general penalty under section 125 reduced from ₹25,000 to ₹10,000.
- Pre-deposit for penalty-only appeals capped at ₹40 crore.
5. Arrest and Prosecution
- Power of arrest under section 69 to be withdrawn completely.
- Prosecution threshold raised from ₹1 crore to ₹5 crore; offences under section 132 narrowed and punishments rationalised.
6. Input Tax Credit
- Refund of accumulated ITC on input services (inverted duty, ITC availed on or after 1 November 2026) and on capital goods (spread over 60 months, ITC availed on or after 1 April 2027).
- Section 17(5) blocks removed for outdoor catering, health and life insurance, telecom towers, pipelines outside the factory, free samples and goods destroyed on shelf-life expiry.
- Personal hearing before deciding objections to credit blocked under rule 86A.
7. Exports and E-way Bills
- Services to foreign branches or offices of the same entity may qualify as export of services; section 13(3)(a) of the IGST Act to be omitted.
- Vehicles may be intercepted only on specific intelligence with Joint Commissioner approval, and not in transit States.
8. Small Taxpayers and Other Measures
- Late fee waived for taxpayers with turnover up to ₹5 crore if the return is filed by the end of the month in which it was due.
- Optional Annual Return Quarterly Payment (ARQP) scheme approved in principle for B2C-only taxpayers with turnover up to ₹5 crore.
- E-invoicing extended to reverse-charge purchases from unregistered persons and import of services (turnover ₹5 crore and above).
9. Rates and Clarifications
- Psyllium seeds (Isabgol): NIL rate.
- All toys under heading 9503 covered by the notified rate entry.
- EV passenger transport and rental: option of 5% with restricted ITC.
- Delivery services through e-commerce operators: 5% without ITC.
- Plastic waste, e-waste, tyre waste and used cooking oil from unregistered persons to be under reverse charge.
Who is affected
All GST-registered businesses, in particular exporters, e-commerce sellers, inverted-duty businesses and small taxpayers.
What you should do
- No immediate change: continue to follow the existing provisions until the amendments, notifications and circulars are issued.
- Track CBIC notifications for effective dates, especially for refunds, ITC and penalty changes.
- Exporters and inverted-duty businesses: review refund eligibility for ITC on input services and capital goods.
- Taxpayers with pending small-value notices or blocked credit under rule 86A: review the position once the changes are notified.
Explain in simple words
The GST Council has suggested a large set of changes to make GST simpler and less litigation-heavy. These are recommendations, so they become law only when the Government amends the GST Acts and Rules and issues notifications and circulars.
For most businesses the practical benefits are faster registration changes, quicker and largely automatic refunds, no notices for very small amounts, lower penalties when tax is paid on time, removal of arrest powers and a higher limit before prosecution.
Some businesses will gain more input tax credit, such as on health insurance, outdoor catering and free samples, and exporters and inverted-duty businesses may get refunds of credit on services and capital goods. Rate changes apply to specific items only, such as Isabgol, toys and e-commerce delivery services.
Source
GST Council, dated 08.10.2026
Read the official document