57th GST Council Meeting: Big Changes Every Taxpayer Must Know!

1. INTRODUCTION

The 57th meeting of the Goods and Services Tax (GST) Council was held on 8 October 2026 in New Delhi under the chairpersonship of Smt. Nirmala Sitharaman, Hon’ble Union Minister for Finance and Corporate Affairs.

Following the next-generation GST reforms recommended at the 56th meeting, which focused primarily on rationalisation of GST rates, the 57th GST Council meeting concentrated on simplifying GST compliance, reducing unnecessary litigation, improving input tax credit (ITC) and refund mechanisms, facilitating trade, and creating a more transparent and taxpayer-friendly tax administration.

The recommendations cover several important areas, including GST registration, return filing, refunds, penalties, prosecution, movement of goods, export of services, and the taxation of specific goods and services.

For businesses, professionals, tax practitioners, and ordinary taxpayers, these recommendations are significant because they seek to reduce procedural difficulties, minimise avoidable notices, improve working capital, and provide greater clarity on the application of GST law.

Important clarification: The measures discussed below are recommendations of the GST Council. They will be implemented through the relevant notifications, circulars, and legislative amendments. The recommendations should not automatically be treated as operative law until the applicable legal instruments take effect.

2. MAJOR HIGHLIGHTS AT A GLANCE

3. GST REGISTRATION: SIMPLIFICATION AND FASTER APPROVALS

The GST Council has recommended several measures to make registration, amendment, and cancellation processes simpler and more transparent.

3.1 Clearer guidelines for new GST registrations

Under the existing framework described in the press release, automatic registration through Rule 14A of the CGST Rules, 2017, is available to eligible applicants who do not intend to pass on input tax credit exceeding ₹2.5 lakh per month.

For other applicants, the Council has recommended the following improvements:

• Comprehensive guidelines: A circular will specify the documents and information required for GST registration, supported by FAQs.
• Revised GST REG-01: The registration application will include dropdown selections for prescribed documents and information.
• Improved GST portal: A more user-friendly interface, navigation options, tooltips, and contextual guidance will help applicants complete the application correctly.

Practical example: Suppose a business applies for GST registration but receives repeated queries because it has not uploaded the correct address proof or supporting documents. Clearer document requirements and guided selections should help the applicant submit a more complete application at the outset.

The expected benefit is fewer avoidable queries and rejections, along with faster processing by tax officers.

3.2 Automatic acceptance of registration amendments

The Council has recommended changes to Rule 19 of the CGST Rules, 2017.

Under the proposal:

• Amendments to registration particulars will generally be accepted automatically on the GST portal, except amendments relating to the Principal Place of Business (PPoB).
• For taxpayers registered under Rule 14A, amendments to all registration particulars, including the PPoB, will be accepted automatically.

Practical example: If an eligible business changes its email address or other registration particulars, it should be able to update those details through a more automated process rather than routinely waiting for officer intervention.

The proposal is intended to enable easier, near-real-time updates to registration records. The applicable rules and portal implementation will determine the final procedure.

3.3 Simplification of GST registration cancellation

The Council has recommended a phased approach to automatic cancellation of registration.

Phase 1: Applications in Form GST REG-16 will be accepted automatically once all pending returns have been filed and all outstanding dues have been paid, in the following cases:

1. The taxpayer has not passed on ITC exceeding ₹2.5 lakh in any month since registration.
2. The taxpayer has passed on ITC exceeding ₹2.5 lakh in a month but has filed the final return in Form GSTR-10 within the prescribed period.

Phase 2: All cancellation applications will be accepted automatically once the taxpayer has filed pending returns and paid outstanding dues. Form GST REG-16 will also be amended to allow details of Form GSTR-10 to be furnished within the cancellation application.

The Council has additionally recommended a system-based process for cancellation and revocation where taxpayers fail to file returns or furnish bank account details within the prescribed period, and subsequently comply with the requirements.

What does this mean for taxpayers?

Businesses that have discontinued operations may benefit from a simpler exit process. However, automatic cancellation is not proposed as a substitute for filing pending returns and paying outstanding dues.

3.4 Simplified registration for small e-commerce sellers

The Council has recommended introducing Rule 14B in the CGST Rules, 2017, to facilitate eligible small suppliers of goods selling through Electronic Commerce Operators (ECOs).

The proposed mechanism is intended for suppliers who:

• Sell goods through e-commerce platforms.
• Make supplies in States or Union Territories where they do not have a physical presence.
• Intend to pass on ITC not exceeding ₹2.5 lakh per month, subject to the conditions specified in the proposal.
• Declare the e-commerce operator's warehouse in the relevant State/UT as their Principal Place of Business.

The registration is proposed to be granted automatically, subject to prescribed conditions.

Example: A small seller based in Delhi wants to sell goods through an e-commerce platform to customers in another State. Under the proposed mechanism, the seller may be able to obtain the required registration without establishing a separate physical business location in that State, subject to the applicable conditions.

This could reduce the cost of geographical expansion for small sellers. It does not mean that a seller receives one universal GSTIN for all States or that all registrations and compliance obligations are eliminated.

4. GST RETURN FILING: BETTER RECONCILIATION OF TAX LIABILITY AND ITC

One of the important recommendations concerns discrepancies between GST returns, particularly Forms GSTR-1, GSTR-1A, IFF, GSTR-3B, and GSTR-2B.

Differences between outward supply details, tax liability, and ITC claims can result in system-generated intimations, notices, reconciliation work, and disputes. The Council has recommended an alternative mechanism to improve the accuracy of return reporting.

4.1 Better reconciliation between GSTR-1 and GSTR-3B

The Council has recommended enhancements to Forms GSTR-1, GSTR-1A, and the Invoice Furnishing Facility (IFF) to improve reconciliation with GSTR-3B.

It has also recommended a mechanism under Rule 61 to enable correct reporting and correction or rectification of tax liability so that the liability reported in GSTR-3B aligns with the relevant outward supply details.

Example: If a taxpayer reports outward supplies of ₹20 lakh in GSTR-1 but inadvertently reports a different taxable value in GSTR-3B, the proposed mechanism is intended to facilitate correction and alignment of the relevant information.

Taxpayers should continue reconciling their returns carefully rather than assuming that every mismatch will be automatically corrected.

4.2 Electronic statement for reverse charge and ITC

The Council has recommended introducing an electronic statement titled “Electronic Statement of tax paid on Reverse Charge basis and input tax credit claimed.”

The purpose is to help taxpayers correctly report:

• Tax payable under the Reverse Charge Mechanism (RCM).
• Tax paid under RCM.
• ITC claimed in relation to eligible RCM transactions.

This should make it easier to track the relationship between reverse-charge liability and the corresponding credit.

4.3 Electronic Credit Reversal and Reclaim Statement

A proposed electronic statement under Rule 86C will help taxpayers report ITC that has been reversed and subsequently reclaimed in GSTR-3B.

Example: If a taxpayer reverses ITC in one period and becomes eligible to reclaim it in a later period, the electronic statement is intended to improve the tracking of the reversal and reclaim.

This can assist both taxpayers and tax authorities in reconciling credit movements and identifying discrepancies.

4.4 Invoice Management System and GSTR-2B

The Council has recommended a mechanism under which recipients can accept, reject, or keep pending specified inward supply documents available on the GST portal through the Invoice Management System (IMS), subject to prescribed conditions.

The proposal also addresses the treatment of credit notes and the period for which they may remain pending.

The objective is to improve the accuracy of the ITC statement generated in GSTR-2B and reduce disputes arising from incorrect or unreconciled invoice information.

4.5 Proposed implementation date

The Council has recommended that the alternative mechanism for correcting tax liability and ITC reporting be brought into force from the April 2027 return period.

It has also recommended placing the proposed mechanism in the public domain for time-bound stakeholder consultation. The Union Finance Minister has been authorised to approve necessary changes based on the feedback received.

Accordingly, taxpayers and professionals should distinguish between the recommendations and the final procedures notified for implementation.

5. FASTER GST REFUNDS: A MAJOR WORKING-CAPITAL REFORM

Delayed refunds can create serious cash-flow problems, particularly for exporters and businesses operating under an inverted duty structure. The Council has therefore recommended a more automated refund-processing framework.

5.1 Automatic refunds of excess cash ledger balances

The Council has recommended that full refunds of eligible excess balances in the electronic cash ledger be sanctioned automatically by the system, without officer intervention.

This could help taxpayers recover money lying unused in their GST cash ledger more efficiently.

5.2 Reduction in the acknowledgement timeline

The Council has recommended reducing the time limit for issuing an acknowledgement or deficiency memo from 15 days to 10 days.

If the proper officer does not issue an acknowledgement or deficiency memo within the proposed 10-day period, the system would provide for deemed acknowledgement.

The change is intended to reduce uncertainty during the initial stage of refund processing.

5.3 Provisional refund of 90% of eligible claims

For refund claims relating to zero-rated supplies and inverted duty structure, the Council has recommended that 90% of the amount claimed be sanctioned provisionally through an automated system, based on risk identification and evaluation.

The proposal aims to release a substantial portion of eligible refund claims without waiting for completion of the entire manual process.

Example: If an eligible taxpayer submits a refund claim of ₹10 lakh, the proposed provisional refund mechanism could provide for the automatic sanction of ₹9 lakh, subject to the prescribed conditions and system-based risk assessment.

This is an illustration of the proposed mechanism, not a guarantee that every ₹10 lakh claim will receive ₹9 lakh automatically.

5.4 Further automation in the second phase

In the second phase, the Council has recommended:

• Automated acknowledgement after system verification of the refund application.
• Automated sanction of the full eligible refund relating to zero-rated supplies in acknowledged cases, after adjustment of pending dues, if any, and subject to risk assessment.

The proposal distinguishes the initial provisional refund mechanism from the more comprehensive automation envisaged for the second phase.

5.5 Simplification of refund applications

The Council has recommended amendments to Form GST RFD-01 so that refund information can be captured in a system-readable format.

For refund claims relating to zero-rated supplies and inverted duty structure, the proposal also seeks to dispense with the requirement to upload scanned documents.

This should reduce repetitive documentation and make electronic processing easier.

5.6 Removal of a restriction on zero-rated goods turnover

The Council has recommended removing the restriction under Rule 89(4)(C) that limits the turnover of zero-rated supplies of goods to 1.5 times the value of like goods supplied domestically.

The proposed change is intended to facilitate refunds for eligible exporters where the existing turnover restriction creates a limitation.

5.7 Clarification of the ₹1,000 refund threshold

The Council has recommended amending Section 54(14) of the CGST Act to clarify that the ₹1,000 threshold applies to the aggregate refund amount under CGST, SGST/UTGST, and IGST taken together, rather than being separately considered for each component.

This should provide greater certainty when determining whether a refund claim meets the prescribed monetary threshold.

5.8 Interest on refund of appeal pre-deposits

The Council has recommended amending Section 115 to establish a standalone provision for the interest rate applicable to refunds of pre-deposits paid for filing appeals.

It has also recommended a circular clarifying the applicable interest treatment.

This is intended to improve certainty for taxpayers who obtain refunds of amounts deposited during appellate proceedings.

Overall impact: If implemented as proposed, the refund reforms could improve working capital, reduce manual intervention, shorten processing delays, and make the refund system more predictable for eligible taxpayers.

6. GST NOTICES, ADJUDICATION, PENALTIES AND APPEALS

The Council has recommended measures to improve the quality of tax proceedings and reduce unnecessary litigation.

6.1 Minimum threshold of ₹10,000 for show-cause notices

The Council has recommended a minimum monetary threshold of ₹10,000, calculated by combining CGST, SGST, IGST, and cess, for issuing show-cause notices under the relevant provisions of Sections 73, 74, and 74A.

Under the proposal, notices would not be issued where the tax amount involved is below ₹10,000.

The Council has also recommended a statutory mechanism for dealing with pending notices and appeals involving amounts below this threshold. Such matters would be decided as if the threshold had been in force when the notice was issued.

Practical significance: Small-value tax disputes can consume disproportionate time and administrative resources. The proposed threshold seeks to reduce such disputes and allow taxpayers and tax authorities to focus on more substantial cases.

This should not be interpreted as a blanket exemption from paying GST or as permission to disregard compliance obligations for small amounts. The final legislation will determine the precise scope and treatment of pending matters.

6.2 Reduced penalty in specified non-fraud cases

The Council has recommended a reduced penalty of 5% in non-fraud cases where the tax and applicable interest are paid within the prescribed period after the adjudication order:

• Within 30 days under Section 73.
• Within 60 days under Section 74A.

The Council has also recommended removing the minimum penalty of ₹10,000 in non-fraud cases.

The objective is to encourage timely settlement of eligible cases and reduce prolonged disputes.

Taxpayers should verify the applicable section, payment conditions, and statutory timelines before relying on the proposed reduced penalty.

6.3 Treatment of penalty as a charge in specified cases

The Council has recommended a provision to deem the penalty amount as a charge where the full tax amount, together with applicable interest and penalty, is voluntarily paid within the specified period.

The precise consequences will depend on the final statutory wording and the conditions attached to the provision.

6.4 Reduction in the maximum general penalty

The Council has recommended reducing the maximum general penalty under Section 125 of the CGST Act from ₹25,000 to ₹10,000.

This is a proposed reduction in the maximum general penalty under that section. It should not be confused with changes to penalties specifically prescribed under other provisions of GST law.

6.5 Cap on pre-deposit for penalty-only appeals

The Council has recommended an upper limit of ₹40 crore on the pre-deposit payable in cases where the order involves only a penalty and no demand of tax.

The proposed cap is split as follows:

• ₹20 crore under CGST.
• ₹20 crore under SGST/UTGST.

The recommendation covers appeals before the Appellate Authority under Section 107(6) and the Appellate Tribunal under Section 112(8).

Example: A taxpayer facing a very large penalty-only order may otherwise be required to deposit a substantial amount to pursue an appeal. A statutory cap would limit the financial burden associated with accessing appellate remedies.

The recommendation concerns penalty-only cases and should not be assumed to apply identically to appeals involving a demand of tax.

6.6 Better standards for notices and adjudication orders

The Council has recommended a comprehensive circular laying down guidelines for:

• Quality and clarity of demand notices.
• Timely issuance of notices and orders.
• Proper justification for invoking fraud, wilful misstatement, or suppression of facts.
• Compliance with the principles of natural justice.
• Conduct of personal hearings.

The aim is to make tax proceedings more consistent and fair, while reducing disputes caused by vague allegations, procedural defects, or inconsistent interpretation.

7. GST ARREST AND PROSECUTION: IMPORTANT PROPOSED CHANGES

One of the most prominent recommendations of the 57th GST Council meeting concerns the treatment of arrest and prosecution under GST law.

7.1 Proposed withdrawal of arrest powers

The Council has recommended the complete withdrawal of arrest powers under GST through the proposed omission of Section 69 of the CGST Act, 2017.

The recommendation is intended to support a more trust-based tax administration while retaining effective measures against fraud and evasion.

Because the proposal requires a legislative amendment, the existing statutory position should not be assumed to have changed solely because the Council has made the recommendation.

7.2 Increase in the prosecution threshold

The Council has recommended increasing the monetary threshold for prosecution from ₹1 crore to ₹5 crore.

The objective is to reserve criminal prosecution for cases meeting the revised statutory threshold, subject to the final law and the applicable offence provisions.

This change could reduce exposure to prosecution for cases falling below the proposed threshold. However, it does not remove the underlying obligation to pay tax or eliminate other applicable consequences.

7.3 Rationalisation of specified offences

The Council has recommended several changes to Section 132 of the CGST Act, including:

• Omission of clause (i) of Section 132(1).
• Deletion of the words “evades tax” in clause (e).
• Deletion of the words “or in any other manner deals with” in clause (h).
• Narrowing the offence under clause (c) to fraudulent availment of ITC without receipt of goods or services, or without an invoice or bill.
• Rationalisation of punishment for various offences under Section 132.

The exact scope of the changes will depend on the amendments enacted.

What should businesses do?

Businesses should continue maintaining proper tax invoices, books of account, e-way bills, return reconciliations, and supporting documents. The proposed relaxation in prosecution provisions is not a substitute for accurate reporting or compliance with GST law.

8. INPUT TAX CREDIT (ITC): PROPOSED EXPANSION OF ELIGIBILITY

Input Tax Credit is one of the most important features of GST. It allows a registered taxpayer to claim credit for eligible GST paid on business purchases, thereby reducing the cascading effect of taxes.

However, Section 17(5) of the CGST Act restricts credit on specified goods and services. The Council has recommended changes to relax certain restrictions and improve the flow of ITC through the supply chain.

8.1 Proposed removal of restrictions on specified ITC

The Council has recommended removing restrictions on ITC in respect of the following categories, subject to the final amendments and applicable conditions:

• Outdoor catering.
• Health and life insurance.
• Telecommunication towers.
• Pipelines laid outside factory premises.
• Free samples.
• Goods destroyed or written off on expiry of shelf life as required by law.

These recommendations seek to reduce the cascading effect of taxes and improve credit availability.

Example: A business may incur GST on certain employee insurance services or business infrastructure. Where credit is currently restricted under the applicable provisions, the proposed amendments may allow eligible ITC to be claimed.

However, the recommendation should not be read as an unconditional right to claim credit on every expense in these categories. The final amendment to Section 17(5), together with the general conditions under Section 16 and any other applicable restrictions, will determine the actual entitlement.

8.2 Refund of accumulated ITC on input services

The Council has recommended permitting refunds of accumulated ITC on input services in cases involving the inverted duty structure.

An inverted duty structure generally arises where the GST rate on inputs is higher than the GST rate on outward supplies, resulting in the accumulation of credit.

The recommendation provides that refunds of eligible ITC on input services relating to the inverted duty structure will be available for credit availed on or after 1 November 2026.

Example: A manufacturer purchases taxable services and goods on which GST is charged at higher rates but sells finished products subject to a lower GST rate. This may result in accumulated ITC. The proposed relaxation could allow eligible credit relating to input services to be refunded, reducing the amount locked into the business.

8.3 Refund of ITC on capital goods

The Council has also recommended allowing refunds of accumulated ITC on capital goods in cases involving zero-rated supplies and the inverted duty structure.

The proposal provides that:

• The refund of eligible ITC on capital goods will be spread over 60 months.
• It will be available for ITC availed on capital goods on or after 1 April 2027.

Capital goods are assets used in business operations, such as eligible machinery and equipment.

The proposed 60-month mechanism is intended to facilitate the refund of accumulated credit over a defined period rather than treating the entire capital-goods credit as immediately refundable.

Expected benefit: These measures could improve liquidity for exporters and businesses facing inverted duty structures, particularly those making significant investments in machinery, infrastructure, and taxable input services.

9. EXPORT OF SERVICES: PROPOSED RELIEF FOR INDIAN SERVICE PROVIDERS

The Council has recommended changes to the IGST Act to facilitate the treatment of eligible supplies as exports of services and improve access to export-related benefits.

9.1 Services supplied to or through foreign offices and branches

The Council has recommended omitting the condition under Section 2(6) of the IGST Act that the supplier and recipient must not be establishments of a distinct person in the circumstances addressed by the proposal.

The intention is to facilitate export-related refunds for Indian service providers supplying services to or through their foreign offices and branches.

Example: An Indian service provider operates through an overseas branch and supplies services connected with its international operations. The proposed amendment is intended to address the existing restriction affecting the qualification of certain such supplies as exports of services.

The actual treatment will depend on the final amendment and the other statutory conditions governing export of services.

9.2 Clarification regarding receipt of export proceeds

The Council has recommended issuing a circular clarifying issues concerning receipt of payment in foreign exchange or Indian rupees, wherever permitted, for exports of goods and services.

This is intended to provide greater clarity to exporters regarding the permitted modes of receipt of export consideration.

9.3 Place of supply for specified services

The Council has recommended omitting clause (a) of Section 13(3) of the IGST Act for the specified category of services where goods are physically made available by the recipient to the supplier.

Under the proposed change, the default rule under Section 13(2)—generally, the location of the recipient—would determine the place of supply.

This is intended to facilitate access to export-related benefits for Indian service providers rendering the relevant services to foreign recipients.

9.4 Goods delivered to overseas buyers in SEZs or FTWZs

The Council has recommended an explanation to Section 16(1) of the IGST Act to provide greater certainty where:

• Goods are supplied to an overseas buyer.
• Delivery takes place to that buyer in a Special Economic Zone (SEZ) or Free Trade Warehousing Zone (FTWZ).
• Payment is received in convertible foreign exchange or in Indian rupees wherever permitted by the RBI.

The proposal is intended to treat qualifying supplies as supplies of goods to an SEZ/FTWZ for zero-rating purposes.

This could benefit Indian manufacturers supplying goods to overseas buyers that are delivered into these zones for warehousing or further processing.

10. E-WAY BILLS AND MOVEMENT OF GOODS: PROPOSED RESTRICTIONS ON INTERCEPTION

The Council has recommended changes to Sections 68, 129, and 130 of the CGST Act, 2017, to facilitate the movement of goods and reduce unnecessary interception during transportation.

10.1 Intelligence-based interception

Under the recommendation, a conveyance carrying goods may be intercepted only on the basis of specific intelligence and with authorisation from an officer not below the rank of Joint Commissioner.

This is intended to make interception more targeted rather than routine.

10.2 Restriction on action in transit States

The Council has recommended that inspection and further action involving detention or seizure may be taken where either the supplier or recipient is located or registered in the State where interception occurs.

The proposal seeks to prevent interception in transit States in the ordinary circumstances covered by the recommendation.

However, an exception has been specified where no e-way bill has been generated or the conveyance carries no document showing the origin or destination of the goods. In such cases, inspection, detention, or seizure may take place irrespective of jurisdiction.

10.3 Confiscation of goods in transit

The Council has recommended that the confiscation provisions under Section 130 should not apply to goods or conveyances in transit.

Example: A truck carrying goods from one State to another may pass through an intermediate State. The proposed framework aims to reduce unnecessary interference by authorities in transit States, while retaining specified powers where essential transport documentation is absent.

The overall objective is to improve logistics efficiency, reduce transportation delays, and facilitate interstate trade. The final statutory wording will determine the precise scope of the restrictions and exceptions.

11. OPPORTUNITY OF BEING HEARD BEFORE BLOCKING ITC

The Council has recommended amending Rule 86A of the CGST Rules, 2017, to introduce a mechanism allowing taxpayers to object to the blocking of an amount in their electronic credit ledger.

The proposed mechanism includes an opportunity for the taxpayer to receive a personal hearing before the proper officer decides the objection.

This is an important procedural safeguard because blocking ITC can affect a business's ability to discharge its tax liabilities through available credit.

Practical example: If a taxpayer's electronic credit ledger is blocked and the taxpayer disputes the action, the proposed mechanism would provide an avenue to submit an objection and seek a personal hearing before the officer decides the matter.

The recommendation does not mean that ITC cannot be blocked in legally permissible circumstances. It seeks to introduce an opportunity for the taxpayer to present their case.

12. LATE-FEE RELIEF FOR SMALL TAXPAYERS

The Council has recommended a waiver of late fees for delayed returns under Section 39(1) of the CGST Act for taxpayers whose annual turnover in the preceding financial year was up to ₹5 crore.

The proposed waiver is subject to an important condition: the delayed return must be filed by the end of the month in which it was due.

For example, if an eligible return is due during a particular month and the taxpayer files it by the end of that same month, the proposed relief may apply, subject to the final notified conditions.

This is intended to reduce the compliance burden for small taxpayers and encourage timely filing.

It should not be assumed that all historical late fees will be waived or that every delayed return qualifies. The recommendation is specifically linked to the turnover threshold and filing deadline described above.

13. OPTIONAL ANNUAL RETURN QUARTERLY PAYMENT SCHEME (ARQP)

The Council has approved, in principle, a concept note for an optional Annual Return Quarterly Payment (ARQP) scheme.

The proposed scheme is intended for taxpayers who:

• Have aggregate turnover of up to ₹5 crore in the preceding financial year.
• Are engaged exclusively in supplies to unregistered persons, commonly referred to as Business-to-Consumer (B2C) supplies.

The scheme aims to simplify compliance for eligible small, consumer-facing businesses.

For example, a small retailer whose business is exclusively focused on sales to individual consumers may fall within the intended category, subject to the final eligibility conditions.

However, the press release records only in-principle approval of the concept note. It does not provide a complete operational framework, including the final filing procedure, payment schedule, or all eligibility conditions.

Therefore, eligible businesses should await the relevant notifications and detailed instructions before changing their existing compliance arrangements.

14. OTHER IMPORTANT GST COMPLIANCE RECOMMENDATIONS

In addition to the major reforms discussed above, the Council has recommended several measures concerning specific compliance issues.

14.1 Alignment of return filing and ITC time limits

The Council has recommended amendments to Sections 16, 37, and 39 of the CGST Act to align provisions relating to outward supply statements and returns with the time limit for availing ITC under Section 16(4).

The objective is to improve consistency between return-filing provisions and ITC eligibility timelines.

14.2 Clarification of e-commerce operator tax liability

An amendment to Section 9(5) has been recommended to clarify the liability of an Electronic Commerce Operator to pay GST on notified services, irrespective of the business models being followed.

This is intended to address uncertainty over the tax liability of operators in different commercial arrangements.

14.3 Validation of notices covering multiple financial years

The Council has recommended introducing a validation clause in the CGST Act for notices held invalid by various courts on the ground that they covered multiple financial years.

The precise scope and effect will depend on the enacted provision. Taxpayers should not assume that every previously invalid notice will automatically become valid.

14.4 Extension of e-invoicing

The Council has recommended extending e-invoicing to:

• Domestic supplies received from unregistered persons where GST is payable under the Reverse Charge Mechanism.
• Import of services.

The proposal is intended for taxpayers with aggregate annual turnover of ₹5 crore and above.

Businesses within the proposed category should monitor the final implementation details, including the effective date and applicable reporting requirements.

14.5 GST Appellate Tribunal framework

The Council has approved amendments to the CGST Act and the GSTAT (Appointment and Conditions of Service of President and Members) Rules, 2023, to align the framework relating to the GST Appellate Tribunal with the Tribunals Reforms Act, 2026 and the relevant 2026 rules governing tribunal appointments and service conditions.

This is aimed at aligning the GSTAT framework with the updated tribunal-related legal framework.

15. CLARIFICATIONS AND CHANGES RELATING TO GST ON GOODS

The Council has also recommended clarifications and changes affecting particular goods. These measures address classification issues, ITC treatment, reverse charge, and exemptions.

15.1 Important point for second-hand vehicle dealers

Under the margin scheme, the Council has clarified that the restriction on ITC applies to tax paid on the procured second-hand vehicles themselves.

The proposed clarification would allow eligible ITC on other inputs and services, such as:

• Spare parts.
• Repair and maintenance services.
• Technology services.
• Rent.
• Marketing and advertising services.

This is relevant for businesses dealing in used vehicles because their operating expenses may include substantial GST-bearing purchases and services.

The final treatment will depend on the applicable notifications and conditions.

15.2 Reverse charge on specified waste and scrap

For the specified categories of waste and scrap supplied by an unregistered person to a registered person, the Council has recommended a reverse-charge mechanism.

The proposal also states that the unregistered supplier must obtain registration when the applicable threshold is crossed, while the registered recipient liable under RCM must pay the tax even if the supplier remains below the threshold.

For specified supplies from one registered person to another registered person, a 2% TDS requirement has also been recommended.

Businesses engaged in scrap trading should pay particular attention to the final notifications because these changes may affect vendor onboarding, invoice documentation, tax payment, and accounting processes.

16. CLARIFICATIONS AND CHANGES RELATING TO GST ON SERVICES

The Council has recommended several service-related changes intended to provide clarity, facilitate business, and grant specified exemptions.

16.1 Delivery services supplied through e-commerce platforms

The proposed changes are particularly relevant to businesses operating delivery models through electronic commerce operators.

The Council has recommended bringing specified delivery services, other than courier and postal services, within Section 9(5) where the person supplying the services is not liable for registration under Section 22(1). A 5% GST rate without ITC has been recommended for the specified category.

A similar 5% rate without ITC has been recommended for delivery services relating to goods supplied or ordered through an e-commerce operator.

The Council has also recommended excluding a specified exemption for transportation of goods to unregistered persons by a Goods Transport Agency (GTA) where the services relate to goods supplied or ordered through an e-commerce operator.

The precise application will depend on the final scope of the provisions and the nature of the transaction.

16.2 Limited ITC for specified service providers

The Council has recommended limited ITC within the same line of business for specified restaurant and outdoor catering services, hotel accommodation services up to ₹7,500 per unit per day, and gym/fitness services.

The proposed approach is similar to the treatment currently available for certain passenger transportation, tour operator, and motor vehicle rental services.

This is not a blanket permission to claim ITC on all purchases by these businesses. The final provisions will establish the eligible credit and restrictions.

16.3 Research and development services

The Council has recommended a simpler self-certification mechanism under which the head of an institution or organisation undertaking R&D services can certify that the activity is genuinely research and development rather than consultancy.

The certification is intended to assist in determining eligibility for the exemption under Entry 44A of Notification No. 12/2017–Central Tax (Rate).

This may reduce the procedural burden for qualifying research institutions and organisations.

16.4 Services involving highways and shipping

The Council has also recommended targeted measures for highway concessionaires and foreign shipping lines.

For qualifying highway projects under the TOT model, the recommendations include exemption for the grant of specified rights to collect tolls and a special procedure for valuation and the timing of GST payment on operation and maintenance services.

For Indian establishments of foreign shipping companies, an exemption has been proposed for specified imports of services from related persons or overseas establishments where no consideration is involved. The Council has also recommended regularising the past period on an “as is where is” basis.

These are specialised recommendations and should be applied only after examining the relevant notifications and conditions.

17. INTELLECTUAL PROPERTY RIGHTS: UNIFORM TREATMENT AS SERVICES

The Council has recommended amending Schedule II of the CGST Act to provide that the transfer of title in intellectual property rights (IPR), whether temporary or permanent, will be uniformly treated as a supply of services.

This could provide greater consistency in GST classification for transactions involving intellectual property.

Businesses dealing with patents, trademarks, copyrights, technology licensing, or other intellectual property arrangements should review their contracts and tax treatment once the relevant amendment is notified.

The proposed change is intended to simplify compliance and facilitate cross-border transactions involving IPR.

18. WHAT SHOULD BUSINESSES AND GST PROFESSIONALS DO NOW?

Although the Council's recommendations aim to simplify compliance, businesses should prepare carefully for the changes rather than immediately altering their GST procedures.

The following checklist can help:

GST readiness checklist

• Review GST registrations: Check registration particulars, pending amendments, cancellation applications, and the documents maintained for registration.
• Reconcile GST returns: Reconcile GSTR-1, GSTR-3B, GSTR-2B, ITC reversals, reclaims, and reverse-charge transactions.
• Review pending notices: Identify small-value disputes and penalty-only appeals, while continuing to comply with existing legal requirements.
• Analyse refund eligibility: Review accumulated ITC, export refunds, inverted duty structure, and eligible input-service or capital-goods credit.
• Review vendor and scrap transactions: Check supplier registration, reverse-charge implications, proposed TDS requirements, and supporting invoices.
• Update transport controls: Review e-way bill processes, goods movement documents, and the procedures used to handle interception.
• Monitor official notifications: Track amendments, circulars, effective dates, FAQs, and portal changes before implementing new procedures.

Important dates mentioned in the recommendations

These dates are taken from the Council's recommendations. Actual implementation remains subject to the relevant legal amendments, notifications, and applicable conditions.

19. OVERALL IMPACT OF THE 57TH GST COUNCIL MEETING

The 57th GST Council meeting represents a significant focus on procedural reform rather than a general revision of GST rates.

Its recommendations address several recurring challenges faced by taxpayers:

• Reduced procedural burden: Greater automation of registration, amendments, cancellations, and refunds.
• Improved working capital: Faster refunds and proposed wider availability of refunds of accumulated ITC.
• Fewer avoidable disputes: Minimum monetary thresholds for notices, clearer adjudication standards, and proposed penalty rationalisation.
• A more targeted enforcement framework: Proposed withdrawal of arrest powers, a higher prosecution threshold, and intelligence-based interception of goods.
• Better ITC reconciliation: Electronic statements and improved alignment of tax liability and credit reported in GST returns.
• Support for small businesses: Proposed relief from late fees, simplified e-commerce registration, and the in-principle ARQP scheme.
• Greater certainty for specialised sectors: Clarifications and exemptions concerning exporters, service providers, vehicle dealers, scrap traders, and other specified industries.

For GST practitioners, the meeting highlights the importance of closely tracking legislative amendments and implementation dates. For businesses, it provides an opportunity to identify areas where processes, documentation, refund claims, and internal controls may need to be reviewed.

The ultimate impact will depend on how the recommendations are translated into enforceable law and operational procedures.

20. CONCLUSION

The 57th GST Council meeting has recommended a broad set of reforms intended to make GST compliance simpler, refunds faster, ITC more accessible in specified cases, and enforcement more proportionate.

The proposed changes to registration, return reconciliation, prosecution thresholds, penalties, refunds, and e-way bill procedures could materially affect the day-to-day compliance responsibilities of businesses and tax professionals.

However, a GST Council recommendation is not, by itself, a substitute for a notification, circular, or legislative amendment. Taxpayers should continue following the law currently in force and implement changes only after confirming the relevant legal instrument, effective date, and conditions.

The focus should be on understanding each recommendation, preparing the necessary documentation and systems, and adopting the new procedures once they become legally effective.

Disclaimer: This article has been prepared for general educational and informational purposes on the basis of the Press Information Bureau release concerning the recommendations of the 57th GST Council meeting, dated 8 October 2026. It is not a substitute for professional tax, legal, or accounting advice. The recommendations discussed herein may require statutory amendments, notifications, circulars, or other implementation measures. Readers should verify the applicable law and official government publications before making tax or compliance decisions.