The 57th GST Council meeting, held on 8 October 2026 at Bharat Mandapam, New Delhi, under Union Finance Minister Smt. Nirmala Sitharaman, shifted focus from rate rationalisation (56th meeting) to process reform and decriminalisation. These recommendations would take legal effect only through notifications, circulars and amendments to the CGST/IGST Acts.

The key highlights of the meeting are as under:

1. Registration & Compliance Simplification
2. Return Filing Reforms
3. Refunds – Faster & Automated
4. Dispute resolution and penalties
5. Input Tax Credit (ITC) Reforms
6. Exports & Zero-Rating
7. Decriminalisation & Penalty Rationalisation
8. Ease of Living & Doing Business
9. Changes/ Clarifications in relation to
   • GST rates on Goods
   • GST rates on Services   

A. Registration & Compliance Simplification – It has been Proposed as under 

• Streamlined Registration: Comprehensive circulars and FAQs to clarify required documents; FORM GST REG-01 form redesigned with drop-downs and tool-tips for user-friendly filing.
• Automatic Amendments: All registration amendments auto-accepted except Principal Place of Business (PPoB). For low-risk taxpayers (Rule 14A), even PPoB changes will be auto-approved.
• Cancellation on taxpayer’s application:
  • Phase 1: FORM GST REG-16 auto-accepted once returns are filed and dues paid, where ITC passed on never exceeded ₹2.5 lakh in any month, or where it did but GSTR-10 was filed in time.
  • Phase 2: All cancellation applications auto-accepted once returns are filed and dues paid; REG-16 will capture GSTR-10 details.

• Suo-moto cancellation: Some grounds for officer-initiated cancellation omitted from rule 21; rules 21A, 22 and new rule 23A set up system-based cancellation and revocation tied to non-filing of returns or missing bank details, and their cure.

• Small sellers on e-commerce platforms (new Rule 14B): Small suppliers of goods via ECOs can register in States/UTs where they have no physical presence by declaring the ECO’s warehouse as PPoB, if ITC passed on stays within ₹2.5 lakh/month (excluding stock transfers). Registration is automatic, subject to conditions.

B. Return Filing Reforms – (Effective from the April 2027 return)

The aim is to cut mismatch-driven notices. The Changes are Proposed for returns from April 2027, after a time-bound public consultation. These are as under –

• Enhanced GSTR-1/1A/IFF reconciliation with GSTR-3B.
• New Facilities:
  • Rule 86D: Insertion of Electronic statement of RCM tax paid and ITC claimed.
  • Rule 86C: Insertion of Electronic credit reversal and reclaim statement.
  • Rule 61(1A): mechanism to correct liability so GSTR-3B matches GSTR-1/1A/IFF.
  • Rule 61(1B): mechanism to correct ITC so GSTR-3B matches GSTR-2B.
  • Rule 60(6A): IMS accept / reject / pending action formalised for GSTR-2B generation, including a time limit for keeping credit notes pending.
• FORM DRC-03: To capture underlying invoice details.

• A circular on reporting ITC and reversals in GSTR-3B in the IMS context.

The revised mechanism goes for public consultation, and the Finance Minister is authorised to approve changes based on feedback.

C. Refunds – Faster & Automated – It has been proposed to make amendments in section 54 of the CGST Act, 2017 and the relevant CGST Rules, 2017, to provide for system-based processing and sanctioning of refund claims, pertaining to excess balance in electronic cash ledger, zero-rated supplies, and inverted duty structure, in the following two phases

Phase 1

• Excess balance in the electronic cash ledger is refunded automatically.
• Acknowledgement or deficiency memo window reduced from 15 days to 10 days, with deemed acknowledgement thereafter.

• Zero-rated supplies and inverted duty structure (IDS): 90% provisional refund sanctioned automatically on system risk evaluation.

Phase 2

• System-based acknowledgement after automated verification.

• Zero-rated supplies: full refund auto-sanctioned, net of pending dues, on risk evaluation.

Other changes recommended as under – 

• FORM GST RFD-01 moves to system-readable data; no scanned uploads for zero-rated and IDS claims.
• Rule 89(4)(C): the cap limiting zero-rated goods turnover to 1.5× the value of like domestic goods is removed.
• Section 54(14): the ₹1,000 minimum applies to the total refund across CGST, SGST/UTGST and IGST.
• Section 115 to become a standalone provision on interest for refund of appeal pre-deposits, with a clarifying circular.

D. Dispute resolution and penalties – It has been proposed as under – 

• To provide a circular with guidelines on the quality and timeliness of SCNs, adjudication and appeal orders; fraud or suppression to be invoked only on merits; personal hearings and natural justice to be observed.
• Minimum ₹10,000 SCN threshold (CGST+SGST+IGST+Cess) under sections 73, 74 and 74A. Pending notices and appeals below ₹10,000 will be decided as if the threshold applied from the start.
• Penalty deemed a “charge” where tax, interest and penalty are paid voluntarily within the time limit.
• 5% penalty in non-fraud cases if tax and interest are paid within 30 days (s.73) or 60 days (s.74A) of the order.
• Minimum ₹10,000 penalty in non-fraud cases removed.
• Maximum general penalty under section 125 cut from ₹25,000 to ₹10,000.
• Pre-deposit for penalty-only appeals capped at ₹40 crore (₹20 crore each CGST and SGST/UTGST) before the Appellate Authority and GSTAT.

E. Input tax credit

• Refund of accumulated ITC widened (s.54(3)): It has been proposed that Zero-rated refunds will include ITC on capital goods; Inverted Duty Structure refunds will include ITC on input services and capital goods.
  • Input services: for ITC availed on or after 1 November 2026.
  • Capital goods: refund spread over 60 months, for ITC availed on or after 1 April 2027.
• Rationalization of Blocked ITC (Amended section 17(5)): It has been proposed to remove the restrictions on ITC for outdoor catering, health and life insurance, telecommunication towers, pipelines laid outside factory premises, free samples, and goods destroyed or written off on expiry of shelf life as required by law.

F. Exports and zero-rating

• Branch exports. It has been proposed to omit Section 2(6)(v) of the IGST Act, so that services supplied to a foreign office or branch of the same entity can now qualify as export of services.
• Place of supply. It has been proposed to omit Section 13(3)(a) of the IGST Act, so that services on goods made physically available by a foreign recipient default to the recipient’s location under s.13(2), facilitate access to export-related benefits.
• SEZ/FTWZ delivery. Explanation to Section 16(1) IGST: i.e. where the goods sold to an overseas buyer but delivered in an SEZ/FTWZ, paid in convertible foreign exchange or RBI-permitted INR, are deemed supplies to the SEZ/FTWZ (zero-rated).
• A circular to clarify foreign exchange and permitted INR receipts for exports.

G. Decriminalisation & Penalty Rationalisation

• Withdrawal of arrest powers under Section 69: Proposed to omit Section 69 (power to arrest) entirely.:
• Increase in the prosecution threshold under section 132: Proposed to raise monetary threshold for prosecution from ₹1 crore to ₹5 crore.
• Narrowing the scope of specified offences under Section 132(1): Proposed changes to clauses (i), (e), (h) and (c) of Section 132(1), with the objective of narrowing the scope of criminal liability for specified conduct.

1. 1. Omission of clause (i) of Section 132(1): The proposed omission would remove the offence presently covered by clause (i) from the list of offences under Section 132(1). This would narrow the range of conduct attracting prosecution under the said provision which deals with “a person who receives or deals with a supply of services despite knowing, or having reason to believe, that the supply violates GST law”.
   2. Deletion of the words “evades tax” from clause (e): The proposed deletion would remove the specific reference to “evades tax” from clause (e). This would alter the statutory scope of the offence and could reduce the overlap between tax evasion-related conduct and the specific offence described in that clause. Proposed amendment removes tax evasion as an expressly specified category of offence under clause (e), while retaining the offence of fraudulently obtaining a refund, subject to the remaining statutory language.
   3. Deletion of the words “or in any other manner deals with” from clause (h): The proposed deletion would remove that additional wording and make the clause more closely confined to the activities specifically enumerated in it. The existing wording contains a list of specific activities followed by the expansive phrase “or in any other manner deals with”. That phrase can potentially extend the clause to forms of involvement beyond the activities expressly listed.
   4. Restricting clause (c) to fraudulent availment of ITC without receipt of goods or services or without an invoice or bill: The Council has recommended that clause (c) cover only fraudulent availment of ITC without receipt of goods or services or without an invoice or bill. The proposal forms part of the broader rationalisation of GST prosecution provisions. The key point is that the proposed scope expressly focuses on fraudulent ITC claims involving the absence of actual receipt or the absence of an invoice or bill. The final legislative wording will determine precisely how these conditions operate.

H. Ease of doing business

1. E-way bill and interception (s.68, 129, 130) – It has been proposed as under –

• Conveyances intercepted only on specific intelligence, authorised by an officer of Joint Commissioner rank or above.
• Inspection, detention or seizure only in the State where the supplier or recipient is located or registered; no interception in transit States.
• Exception: with no e-way bill, or no document showing origin or destination, goods can be acted on in any jurisdiction.
• Confiscation under section 130 not to apply to goods or conveyances in transit.

2. Transfer of title in Intellectual Property Rights (IPR): It has been recommended that Transfer of title, temporary or permanent, to be treated uniformly as a supply of services (Schedule II).

3. Amendment in Rule 86A: It has been recommended that taxpayers can object to blocking of electronic credit ledger and get a personal hearing before the proper officer takes a decision on such objection.

4. Late fee waiver: It has been recommended that for turnover up to ₹5 crore, no late fee on a section 39(1) return filed by the end of the month in which it was due.

5. Annual Return Quarterly Payment (ARQP): It has been proposed for in-principle approval for an optional Annual Return, Quarterly Payment scheme for taxpayers up to ₹5 crore turnover making only B2C supplies.

6. Compliance alignment: Following has been recommended

• Section 16, 37 and 39 aligned with the ITC time limit under Sec. 16(4).

• ECO liability (s.9(5)): ECO liable for notified services irrespective of business model.

• Validation clause for notices held invalid by courts for covering multiple financial years.
• E-invoicing extended to RCM supplies from unregistered persons and import of services, for taxpayers with turnover of ₹5 crore and above.

• GSTAT: Provisions aligned with the Tribunals Reforms Act, 2026.

• Clarificatory circulars on: ISD credit distribution; ITC for banks, financial institutions and NBFCs opting for s.17(4); payment of pre-deposits; ITC on demonstration vehicles; and omission of rule 96(10) effective 23.10.2017, per the Supreme Court.

I. Changes/ Clarifications in relation to GST rates on Goods and Services:

The GST Council have not made any broad rate cuts this time; the proposed changes below are targeted clarifications, exemptions and RCM extensions

1. In relation to Goods

Description of Goods	Decision
Sublimation paper	Classified under heading 4809; past cases regularised “as is where is”
Toys	Rate entries cover all toys under heading 9503 (dolls, puzzles etc.), not only tricycles, scooters, pedal cars
Seaweed-extract bio-stimulants	Classified as fertilisers under heading 3101 if registered under Schedule VI of the Fertiliser Control Order; past cases regularised
Second-hand vehicles (margin scheme)	ITC allowed on spares, repairs, technology, rent, marketing etc.; restriction only on tax paid on the used vehicles bought
Plastic, e-waste, tyre scrap, used cooking oil	RCM when supplied by unregistered to registered persons (recipient pays even if supplier is below threshold); 2% TDS on B2B supplies
Psyllium (isabgol) seeds	NIL rate, whether fresh, chilled, frozen or dried
Re-treaded tractor tyres	Rate aligned with new tractor tyres
CSD / Unit Run Canteens	Compensation Cess not levied on two- and four-wheelers (1.7.2017 to 30.9.2022) and aerated drinks (1.7.2017 to 31.3.2022) exempted

2. In relation to Services

Service	Decision
EV passenger transport and rental with operator	Option of 5% with restricted ITC, where battery charging cost is included in consideration
Delivery services via ECOs	Brought under s.9(5) where supplier is not liable to register; 5% without ITC; also 5% without ITC for delivery of goods ordered through ECOs
GTA to unregistered persons	Entry 21A exemption withdrawn where the goods are supplied or ordered through an ECO
Motor vehicle leasing	Clarity on recovery of registration charges, road tax, insurance and FASTag from lessee
Restaurant, outdoor catering, hotels (up to ₹7,500/unit/day), gym/fitness	Limited ITC in the same line of business, as for passenger transport, tour operators and vehicle rental
Helicopter seat-sharing	Exempt to/from North-East, Sikkim and Bagdogra
Storage of seeds for sowing	Exempt
Curing of coffee	Exempt as agricultural support service
Seamen’s Provident Fund Organisation	Services to members exempt
Research & development	Self-certification by head of institution for Entry 44A exemption
Foreign shipping lines	Import of services from related persons without consideration exempt; past period regularised
NHAI TOT concessions	Grant of toll rights to concessionaire exempt; special valuation and timing for O&M services
Bank Fund Transfer Pricing	Notional inter-branch “interest” covered by the definition of interest

Most changes need notifications or amendments to the CGST and IGST Acts before they apply. The Council fixed only three dates so far:

Date	Change
1 Nov 2026	ITC on input services availed from this date becomes refundable under Inverted Duty Structure
1 April 2027	ITC on capital goods availed from this date becomes refundable (zero-rated and IDS), over 60 months
April 2027 return	Revised liability/ITC amendment mechanism (rules 61(1A), 61(1B), 86C, 86D) proposed to start, after public consultation

To access the complete press release https://cdn.taxo.online/wp-content/uploads/2026/10/Press-Release_-Press-Information-Bureau.pdf