GST Councils 57th Meeting: From Rates to Trust and Process
After GST 2.0 reset rates at the 56th meeting, the 57th meeting (8 October 2026, chaired by FM Nirmala Sitharaman) focused on process reform.
Key Highlights:
Enforcement:
• Arrest powers to be withdrawn.
• Prosecution threshold raised from ₹1 crore to ₹5 crore
• Maximum general penalty cut from ₹25,000 to ₹10,000
• Section 132 offences narrowed, with fraudulent ITC (no goods, services or invoice) as the core
Disputes:
• No show cause notice where tax involved is below ₹10,000
• Reduced 5% penalty in non-fraud cases if paid within 30/60 days of the order
• Pre-deposit capped at ₹40 crore for penalty-only appeals
• Circular on quality of notices, fraud invocation and personal hearings
Refunds & ITC:
• Excess cash ledger balance refunded automatically
• 90% provisional refund for zero-rated supplies and inverted duty
• Acknowledgement window cut from 15 to 10 days
• Accumulated ITC refund on input services (inverted duty) from 1 Nov 2026
• Capital goods ITC refund spread over 60 months from 1 Apr 2027
• ITC relaxed for outdoor catering, health and life insurance, telecom towers, pipelines, free samples and expired goods
• Limited same-line-of-business ITC for restaurants, hotels (up to ₹7,500/day) and gyms
Registration & Returns:
• Auto-accepted amendments and system-based cancellation
• Simplified registration for small e-commerce sellers using the platforms warehouse
• New RCM and credit reversal statements, linked with IMS, to cut mismatches (from April 2027 returns)
• Late fee waived for turnover up to ₹5 crore if the return is filed by month-end
• Optional Annual Return Quarterly Payment scheme (in-principle) for B2C businesses up to ₹5 crore
Exports & Logistics:
• Export of services: distinct person condition removed
• E-way bill: interception only on specific intelligence with Joint Commissioner approval, and none in transit states.
PM Narendra Modi also welcomed the Council’s recommendations, saying that removal of arrest provisions, greater decriminalisation and simpler procedures will have a very positive impact. In his words, the focus is clear:
• Faster decisions.
• Lower compliance costs.
• Automated refunds.
• Trust-based administration.
These are in line with our constant efforts to make GST more efficient, transparent and citizen-friendly.
I believe many of these reforms should have been part of the GST System from start. Anyway, Better Late than Never.
Note: These are Council recommendations Only. They will come into effect legally once the necessary amendments to the CGST/IGST Acts and official notifications/circulars are formally enacted. Thanks.
