The 57th Goods and Services Tax (GST) Council, at its meeting in October 2026, recommended process reforms across registration, returns, refunds, input tax credit (ITC), dispute resolution and enforcement, along with rate clarifications on selected goods and services. The main changes are withdrawal of certain arrest powers of GST officers, a prosecution threshold proposed to rise from ₹1 crore to ₹5 crore, a general penalty cut from ₹25,000 to ₹10,000 and faster refunds. Most changes are expected from 1 April 2027.
GST began on 1 July 2017. The 56th GST Council recommended simplifying the four-tier rate structure into two main rates, 5% and 18%, and a special 40% rate for select goods and services. The 57th meeting deals with procedure, not rates.
The Council is a constitutional body under Article 279A, inserted by the 101st Constitutional Amendment Act, 2016. It is chaired by the Union Finance Minister and includes the Union Minister of State for Finance/Revenue and the States' Finance or Taxation Ministers. The Centre holds one-third of the weighted voting power and the States two-thirds.
Registered taxpayers have grown from around 60 lakh in 2017 to about 1.70 crore as of September 2026. Gross collections were about ₹12.46 lakh crore in April-September 2026, up 11.6% year-on-year.
At present 61% of taxpayers receive automatic registration within three working days. The Council recommended greater certainty on required documents and automatic acceptance of amendments on the portal, except changes to the Principal Place of Business (Section 2(89), CGST Act, 2017). For taxpayers registered through the automatic route, all amendments, including that one, would be accepted automatically. Cancellation applications would be accepted automatically in two phases, and a system-based mechanism would cancel and revoke registration based on non-compliance and later compliance.
Small e-commerce sellers passing ITC of not more than ₹2.5 lakh a month can opt for simple, PAN-based registration in States other than their home State. An e-commerce operator's warehouse can be declared the Principal Place of Business where the seller has no physical presence.
An alternate mechanism to correct liability and ITC is proposed from the April 2027 return period, covering GSTR-1, GSTR-1A, the Invoice Furnishing Facility, GSTR-3B, GST DRC-03 and GSTR-2B.
Refunds will move in two phases. In the first, refunds of excess cash ledger balances become automatic, the acknowledgement period falls from 15 to 10 days, and 90% of claims for zero-rated supplies and inverted duty is expected to be sanctioned within three working days of acknowledgement, based on risk assessment. In the second, the full refund for zero-rated supplies alone would be sanctioned by the system without officer intervention. Refund of accumulated ITC is widened for capital goods from 1 April 2027, spread over 60 months, and for input services under inverted duty from 1 November 2026.
Blocked-ITC restrictions are to be removed for outdoor catering, health and life insurance, telecommunication towers, pipelines outside factory premises, free samples and goods destroyed or written off after shelf life as required by law. Taxpayers will be able to object to amounts blocked under Rule 86A of the CGST Rules, 2017 and seek a personal hearing.
A late fee is waived for taxpayers with turnover up to ₹5 crore if the delayed return is filed by the end of the month in which it was due. A concept note for an optional Annual Return Quarterly Payment (ARQP) scheme, for taxpayers up to ₹5 crore making only B2C supplies, was introduced for further deliberation.
Inter-State goods in movement can be inspected, detained or seized only by officers of the supplier's or destination State. Interception needs specific intelligence and authorisation by an officer not below Joint Commissioner. Faceless assessment is proposed for Central GST, and rate changes would be considered once a year and implemented from the start of the next financial year.
Where an order involves only penalty and no tax demand, the pre-deposit for appeals is capped at ₹40 crore. Amendments will align provisions on the GST Appellate Tribunal (GSTAT) with the Tribunals Reforms Act, 2026. A circular will give tax officers guidelines on demand notices, adjudication and appeal orders, and others will address differing interpretations by field formations.
Among the rate clarifications, psyllium seeds (Isabgol) get a nil rate. Electric-vehicle passenger transport can opt for 5% GST with restricted ITC. Delivery services through an e-commerce operator under Section 9(5) of the CGST Act, 2017 attract 5% GST without ITC where the provider need not register under Section 22(1). Exemptions were also recommended for specified services such as storage of seeds for sowing and coffee curing.
The changes aim to lower compliance costs for MSMEs and small e-commerce firms, speed up working capital through quicker refunds, reduce arbitrary stoppage of inter-State goods and clarify enforcement powers between the Centre and States. Reduced coercive powers and trust-based enforcement, it is argued, can encourage voluntary compliance.
The challenges listed are balancing taxpayer rights against fraud, fake invoices and ITC misuse; the data quality, cybersecurity and algorithms that risk-based systems need; reduced flexibility from annual rate-setting during economic shocks; digital literacy gaps among smaller firms; and coordination among the Centre, States and GSTN.
With reference to the Goods and Services Tax (GST) Council, consider the following statements:
Which of the statements given above are correct?
Which one of the following statements about the refund reforms recommended by the 57th GST Council is not correct?
Consider the following statements:
Statement-I: Under the recommendations of the 57th GST Council, inter-State goods in movement can be inspected, detained or seized only by officers of the supplier's or destination State.
Statement-II: Interception needs specific intelligence and authorisation by an officer not below Joint Commissioner.
Which one of the following is correct in respect of the above statements?
