Navratri Special: 9 Important Changes in GST Returns Recommended in 57th GST Council Meeting!



Quick Summary
The 57th GST Council Meeting, held on 8th October 2026, introduced nine significant changes to GST returns, aiming to simplify processes and reduce taxpayer mismatches. These reforms include enhanced reconciliation for GSTR-1 and GSTR-3B, provisions for correcting ITC claims, formalising the Invoice Management System, and introducing a new Electronic Credit Reversal and Reclaim Statement. Additionally, changes address RCM payments, linking voluntary tax payments to invoices, aligning return filing deadlines with ITC availability, waiving late fees for small taxpayers, and proposing a new Annual Return Quarterly Payment (ARQP) scheme.

Overview

The 57th GST Council Meeting held on 8 October 2026 recommended several reforms to simplify GST return filing, improve reconciliation and reduce taxpayer compliance issues. Presented through a Navratri-themed conversation between Arjuna and Krishna, this article explains nine key changes, including correction of tax liability and Input Tax Credit (ITC), formal recognition of the Invoice Management System (IMS), statutory backing for ITC reversal and reclaim statements, and improved reporting of Reverse Charge Mechanism (RCM) transactions. It also covers proposed changes to Form GST DRC-03, alignment of return filing timelines, a conditional late fee waiver for eligible small taxpayers, and the proposed Annual Return Quarterly Payment (ARQP) scheme. The first six changes are recommended for implementation from the April 2027 return period, subject to public consultation. Other changes will take effect as notified.

9 Key GST Return Changes from 57th GST Council Meeting

Arjuna (Fictional Character): Krishna, Navratri is being celebrated everywhere with nine days of devotion to the nine forms of Devi. At the same time, the 57th meeting of the GST Council was held on 8th October 2026 in New Delhi. Is there anything special in it for taxpayers?

Krishna (Fictional Character): Arjuna, this meeting focused on process reforms in registration, returns, refunds and adjudication, along with relief measures like removal of arrest provisions and lower penalties. We have already discussed the refund reforms earlier; now let us turn to GST returns, where most mismatches and notices begin. In the spirit of Navratri, let us understand nine important changes in GST returns, one for each form of Shakti.

Arjuna (Fictional Character): Krishna, Navratri begins with Devi Shailputri, the foundation of Shakti. What is the first change?

Krishna (Fictional Character): Arjuna, the first change lays the foundation: correction of liability. GSTR-1, GSTR-1A and IFF will be enhanced for better reconciliation with GSTR-3B, and a new sub-rule (1A) in rule 61 will allow rectification of liability so that GSTR-3B aligns with GSTR-1/1A/IFF.

For example, Mr. A reports outward supplies of ₹10,00,000 in GSTR-1 but shows ₹9,00,000 in GSTR-3B by mistake. Today this gap of ₹1,00,000 becomes a mismatch requiring explanation if a notice is issued. Under the new mechanism, it can be corrected through the return route of that month itself.

Arjuna (Fictional Character): Krishna, Devi Brahmacharini stands for discipline. Many taxpayers make mistakes while claiming ITC. Is there any relief for that?

Krishna (Fictional Character): Arjuna, the second change is correction of ITC. A new sub-rule (1B) in rule 61 will provide for correction of ITC in GSTR-3B so that it aligns with ITC made available in GSTR-2B. Today, excess ITC claimed in GSTR-3B over GSTR-2B can lead to a DRC-01C intimation under rule 88D.

Arjuna (Fictional Character): Krishna, Devi Chandraghanta's bell keeps her devotees alert. But ITC depends on what the supplier uploads. How can a taxpayer stay alert?

Krishna (Fictional Character): Arjuna, the third change is that the Invoice Management System (IMS) gets a formal place through new sub-rule (6A) in rule 60. The recipient can accept, reject or keep pending an inward document for generation of GSTR-2B, subject to conditions, including the period for which a credit note can be kept pending.

Arjuna (Fictional Character): Krishna, Devi Kushmanda spread light in darkness. Sometimes ITC is reversed and claimed back later, and its trail gets lost. How will that be tracked?

Krishna (Fictional Character): Arjuna, the fourth change relates to the "Electronic Credit Reversal and Reclaim Statement", already available on the portal, which gets statutory backing through new rule 86C, to facilitate correct reporting of ITC reversed and reclaimed in GSTR-3B.

Arjuna (Fictional Character): Krishna, Devi Skandamata symbolises care and responsibility. Similarly, under RCM, the recipient bears the responsibility of paying tax. What changes have been recommended?

Krishna (Fictional Character): Arjuna, the fifth change is that the “Electronic Statement of tax paid on Reverse Charge basis and input tax credit claimed”, also already available on the portal, gets statutory backing through new rule 86D, to facilitate correct reporting of RCM liability and ITC in returns. For example, if Mr. B pays ₹18,000 GST under RCM on legal fees, the statement will record it, helping him claim ITC correctly.

Arjuna (Fictional Character): Krishna, Devi Katyayani protects her devotees from injustice. If a taxpayer has already paid tax through DRC-03, how can the taxpayer avoid a demand for the same amount again?

Krishna (Fictional Character): Arjuna, the sixth change is in FORM GST DRC-03. While paying tax voluntarily, the taxpayer will have to declare the details of the underlying invoice, so that the payment can be linked to it, reducing the chances of the same amount being demanded again.

Arjuna (Fictional Character): Krishna, Devi Kalaratri removes darkness and fear. Taxpayers often fear missing time limits. What is the next change?

Krishna (Fictional Character): Arjuna, the seventh change is that sections 16, 37 and 39 will be amended to align the provisions for furnishing GSTR-1 under section 37 and GSTR-3B under section 39 with the time limit for availing ITC under section 16(4). Details will be clear once the amendment is issued.

Arjuna (Fictional Character): Krishna, Devi Mahagauri is the symbol of forgiveness. Small taxpayers often pay late fees for filing GSTR-3B just a few days late. Is there any relief for them?

Krishna (Fictional Character): Arjuna, yes, that is the eighth change. The Council has recommended a waiver of late fee on delayed GSTR-3B under section 39(1) for taxpayers with annual turnover up to ₹5 crore in the preceding financial year, if the return is filed by the end of the month in which it was due. For example, if Mr. C’s GSTR-3B for October, due on 20th November, is filed by 30th November, no late fee will apply.

Arjuna (Fictional Character): Krishna, Navratri ends with Devi Siddhidatri, the giver of accomplishment. I have also heard that a new Annual Return Quarterly Payment (ARQP) scheme will be introduced?

Krishna (Fictional Character): Arjuna, that is the ninth change, but for now the Council has only approved a concept note in principle. The optional ARQP scheme is meant for taxpayers with aggregate turnover up to ₹5 crore in the preceding financial year who make supplies only to unregistered persons (B2C). As the name suggests, it is expected to involve an annual return with quarterly payment; details will be known once it is notified.

Arjuna (Fictional Character): Krishna, after Navratri comes Dussehra, the day of victory. From when will all this apply?

Krishna (Fictional Character): Arjuna, the alternate mechanism for amendment of liability and ITC, covering the first six changes, is recommended from the return for April 2027, after a time-bound public consultation. For the other changes, effective dates will be known only when the notifications or amendments are issued.

Arjuna (Fictional Character): Krishna, what should taxpayers learn from this?

Krishna (Fictional Character): Arjuna, GST is moving from finding mismatches to preventing them. This Dussehra, taxpayers should burn the Ravana of mismatches and po

Overview

The 57th GST Council Meeting held on 8 October 2026 recommended several reforms to simplify GST return filing, improve reconciliation and reduce taxpayer compliance issues. Presented through a Navratri-themed conversation between Arjuna and Krishna, this article explains nine key changes, including correction of tax liability and Input Tax Credit (ITC), formal recognition of the Invoice Management System (IMS), statutory backing for ITC reversal and reclaim statements, and improved reporting of Reverse Charge Mechanism (RCM) transactions. It also covers proposed changes to Form GST DRC-03, alignment of return filing timelines, a conditional late fee waiver for eligible small taxpayers, and the proposed Annual Return Quarterly Payment (ARQP) scheme. The first six changes are recommended for implementation from the April 2027 return period, subject to public consultation. Other changes will take effect as notified.

Arjuna (Fictional Character): Krishna, Navratri is being celebrated everywhere with nine days of devotion to the nine forms of Devi. At the same time, the 57th meeting of the GST Council was held on 8th October 2026 in New Delhi. Is there anything special in it for taxpayers?

Krishna (Fictional Character): Arjuna, this meeting focused on process reforms in registration, returns, refunds and adjudication, along with relief measures like removal of arrest provisions and lower penalties. We have already discussed the refund reforms earlier; now let us turn to GST returns, where most mismatches and notices begin. In the spirit of Navratri, let us understand nine important changes in GST returns, one for each form of Shakti.

Arjuna (Fictional Character): Krishna, Navratri begins with Devi Shailputri, the foundation of Shakti. What is the first change?

Krishna (Fictional Character): Arjuna, the first change lays the foundation: correction of liability. GSTR-1, GSTR-1A and IFF will be enhanced for better reconciliation with GSTR-3B, and a new sub-rule (1A) in rule 61 will allow rectification of liability so that GSTR-3B aligns with GSTR-1/1A/IFF.

For example, Mr. A reports outward supplies of ₹10,00,000 in GSTR-1 but shows ₹9,00,000 in GSTR-3B by mistake. Today this gap of ₹1,00,000 becomes a mismatch requiring explanation if a notice is issued. Under the new mechanism, it can be corrected through the return route of that month itself.

Arjuna (Fictional Character): Krishna, Devi Brahmacharini stands for discipline. Many taxpayers make mistakes while claiming ITC. Is there any relief for that?

Krishna (Fictional Character): Arjuna, the second change is correction of ITC. A new sub-rule (1B) in rule 61 will provide for correction of ITC in GSTR-3B so that it aligns with ITC made available in GSTR-2B. Today, excess ITC claimed in GSTR-3B over GSTR-2B can lead to a DRC-01C intimation under rule 88D.

Arjuna (Fictional Character): Krishna, Devi Chandraghanta's bell keeps her devotees alert. But ITC depends on what the supplier uploads. How can a taxpayer stay alert?

Krishna (Fictional Character): Arjuna, the third change is that the Invoice Management System (IMS) gets a formal place through new sub-rule (6A) in rule 60. The recipient can accept, reject or keep pending an inward document for generation of GSTR-2B, subject to conditions, including the period for which a credit note can be kept pending.

Arjuna (Fictional Character): Krishna, Devi Kushmanda spread light in darkness. Sometimes ITC is reversed and claimed back later, and its trail gets lost. How will that be tracked?

Krishna (Fictional Character): Arjuna, the fourth change relates to the "Electronic Credit Reversal and Reclaim Statement", already available on the portal, which gets statutory backing through new rule 86C, to facilitate correct reporting of ITC reversed and reclaimed in GSTR-3B.

Arjuna (Fictional Character): Krishna, Devi Skandamata symbolises care and responsibility. Similarly, under RCM, the recipient bears the responsibility of paying tax. What changes have been recommended?

 

Krishna (Fictional Character): Arjuna, the fifth change is that the “Electronic Statement of tax paid on Reverse Charge basis and input tax credit claimed”, also already available on the portal, gets statutory backing through new rule 86D, to facilitate correct reporting of RCM liability and ITC in returns. For example, if Mr. B pays ₹18,000 GST under RCM on legal fees, the statement will record it, helping him claim ITC correctly.

Arjuna (Fictional Character): Krishna, Devi Katyayani protects her devotees from injustice. If a taxpayer has already paid tax through DRC-03, how can the taxpayer avoid a demand for the same amount again?

Krishna (Fictional Character): Arjuna, the sixth change is in FORM GST DRC-03. While paying tax voluntarily, the taxpayer will have to declare the details of the underlying invoice, so that the payment can be linked to it, reducing the chances of the same amount being demanded again.

Arjuna (Fictional Character): Krishna, Devi Kalaratri removes darkness and fear. Taxpayers often fear missing time limits. What is the next change?

Krishna (Fictional Character): Arjuna, the seventh change is that sections 16, 37 and 39 will be amended to align the provisions for furnishing GSTR-1 under section 37 and GSTR-3B under section 39 with the time limit for availing ITC under section 16(4). Details will be clear once the amendment is issued.

Arjuna (Fictional Character): Krishna, Devi Mahagauri is the symbol of forgiveness. Small taxpayers often pay late fees for filing GSTR-3B just a few days late. Is there any relief for them?

Krishna (Fictional Character): Arjuna, yes, that is the eighth change. The Council has recommended a waiver of late fee on delayed GSTR-3B under section 39(1) for taxpayers with annual turnover up to ₹5 crore in the preceding financial year, if the return is filed by the end of the month in which it was due. For example, if Mr. C’s GSTR-3B for October, due on 20th November, is filed by 30th November, no late fee will apply.

Arjuna (Fictional Character): Krishna, Navratri ends with Devi Siddhidatri, the giver of accomplishment. I have also heard that a new Annual Return Quarterly Payment (ARQP) scheme will be introduced?

Krishna (Fictional Character): Arjuna, that is the ninth change, but for now the Council has only approved a concept note in principle. The optional ARQP scheme is meant for taxpayers with aggregate turnover up to ₹5 crore in the preceding financial year who make supplies only to unregistered persons (B2C). As the name suggests, it is expected to involve an annual return with quarterly payment; details will be known once it is notified.

Arjuna (Fictional Character): Krishna, after Navratri comes Dussehra, the day of victory. From when will all this apply?

 

Krishna (Fictional Character): Arjuna, the alternate mechanism for amendment of liability and ITC, covering the first six changes, is recommended from the return for April 2027, after a time-bound public consultation. For the other changes, effective dates will be known only when the notifications or amendments are issued.

Arjuna (Fictional Character): Krishna, what should taxpayers learn from this?

Krishna (Fictional Character): Arjuna, GST is moving from finding mismatches to preventing them. This Dussehra, taxpayers should burn the Ravana of mismatches and poor reconciliation by reconciling returns every month, acting on IMS on time and updating their accounting software before April 2027. Just as the nine nights of Navratri end in the victory of Dussehra, a taxpayer who follows these nine changes with discipline will enjoy a notice-free GST journey!


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Name: - UMESH RAMNARAYAN SHARMA. Residential Address: - 16, Motisagar, Samarthnagar, Aurangabad. Ph :- 2332846. Mobile:9822079900. Head Office Address: - R.B.Sharma Co. Chartered Accountants. Block No 7-10, 2nd Floor, Shangri-La Complex, Samarth Nagar, Aurangabad. Ph :- 2332511,2338388. Email:- rbsha ... Read more

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