Recommendations of the 57th Meeting of the GST Council
GST
Dated:- 8-10-2026
GST Council recommends removal of arrest provisions under GST
GST Council recommends raising prosecution threshold from Rs.1 crore to Rs.5 crore
GST Council recommends reduction in general penalty from Rs.25,000 to Rs.10,000
GST Council recommends wider eligibility for input tax credit and refunds
GST Council recommends further simplification of registration and compliance processes
GST Council recommends faster refunds to improve working capital for businesses
GST Council recommends common standards for GST notices and proceedings
GST Council recommends measures for smoother movement of goods across states
GST Council recommends intelligence-based and authorised interception of goods
GST Council recommends simplified GST registration for small sellers on e-commerce platforms
GST Council recommends measures to facilitate export of services
GST Council approves in-
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tion; clarifications regarding applicability of GST on supply of certain goods and services; and other measures for trade facilitation and streamlining compliances in GST. FAQs are being issued for clarification of doubts. Major recommendations made in the 57^th GST Council meeting are as below:
A. Process Reforms
A1. Registration related reforms
1. Streamlining registration process with clear guidelines on filing and processing
1.1 As per recommendations of GST Council made in 56^th meeting, automatic registrations, without officer intervention, are being granted by the portal under rule 14A of the CGST Rules, 2017, in cases where the applicant does not intend to pass on ITC more than Rs.2.5 lakh per month. To streamline processing of registration applications in remaining cases, the GST Council made the following recommendations in the 57^th meeting:
â⬢ issuance of a comprehensive circular specify
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sp; The GST Council recommended an amendment to rule 19 of the CGST Rules, 2017, to provide for automatic acceptance of amendments to all registration particulars on the portal, except those relating to the Principal Place of Business (PPoB). Further, for taxpayers registered under rule 14A of the CGST Rules, 2017 (automatic route), amendments of all registration particulars, including those relating to the PPoB, will be accepted automatically on the portal.
2.2 This will facilitate easy and almost real time updation of registration details on the portal in such cases, without interface with the tax officers.
3. Rationalization of registration cancellation process under GST:
3.1 The GST Council recommended amendments in the CGST Act, 2017 and the CGST Rules, 2017, to simplify the registration cancellation process, as follows:
3.1.1 Automatic cancellation of registration on the application of the taxpayer
Phase 1: The applications for c
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he CGST Rules, 2017 and insertion of rule 23A in CGST Rules, 2017, to provide for a mechanism of system based cancellation and revocation of registration based on non-compliance and subsequent compliance of the defaults of non-filing return or non-furnishing of the details of the bank account, within specified time period.
3.2 These measures will simplify and expedite the process of cancellation of registration and will reduce officer interface and bring more transparency to the cancellation process.
4. Simplified GST registration mechanism for small sellers on the Electronic Commerce Operators (ECO) platform:
4.1 The GST Council, in its 56^th meeting had given an in-principle approval to provide a Simplified GST registration mechanism for small sellers on the Electronic Commerce Operators (ECO) platform. In continuity of the same, the Council in the 57^th meeting recommended insertion of rule 14B in the CGST Rules, 2017, to provide for a simple mechanism for
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to streamline return filing process, so as to minimize mismatches in liability and input tax credit (ITC) in returns:
â⬢ Enhancements in FORM GSTR-1/1A/IFF to enable better reconciliation of the details furnished in these forms with the details reported in the return in FORM GSTR-3B.
â⬢ Insertion of a rule 86D in the CGST Rules, 2017, to provide for a facility namely, “Electronic Statement of tax paid on Reverse charge basis and input tax credit claimed” on the portal, to facilitate the taxpayers in correct reporting of tax liability and ITC on supplies liable to RCM in returns.
â⬢ Insertion of sub-rule (1A) in rule 61 of the CGST Rules, 2017 to provide a mechanism of correct reporting and correction/rectification of liability in the return, so that liability in the return in FORM GSTR-3B aligns with the details of liability furnished in FORM GSTR-1/1A/IFF.
â⬢ Amendment in FORM GST DRC-03, to declare the details of the underlying invoice
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e in FORM GSTR-2B.
â⬢ Issuance of a circular to clarify the manner of furnishing correct and proper information of ITC and reversal thereof in return in FORM GSTR-3B, in the context of IMS, Electronic Credit Reversal and Reclaim Statement and Electronic Statement of tax paid on Reverse charge basis and input tax credit.
5.2 The Council recommended that the provisions regarding alternate mechanism for amendment of liability and ITC in the GST return, may be brought into force from the return of April, 2027.These measures will considerably reduce mismatches in liability and ITC in returns, thus not only reducing demand notices and system generated intimations on account of such mismatches, but also improving the integrity of ITC across the supply chain, thereby facilitating taxpayers.
5.3 Further, the Council recommended placing the proposed revised mechanism in the public domain for a time-bound consultation. Union Finance Minister was authorize
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â⬢ For refund claims on account of zero-rated supplies and inverted duty structure, 90% of the amount claimed will be sanctioned on provisional basis automatically by the system, without officer intervention, on the basis of identification and evaluation of risk by the system.
Phase 2:
â⬢ System-based automated acknowledgment (without officer intervention) on due verification of the refund application by the system.
â⬢ In such acknowledged cases, automated sanction of full refund claim by the system (without officer intervention), in respect of claims pertaining to zero rated supplies, after adjusting pending dues, if any, on the basis of identification and evaluation of risk by the system.
6.2 For expediting and streamlining the refund process, the Council further recommended amendments in the CGST Act, 2017 and the CGST Rules, 2017, to inter-alia provide for:
â⬢ Amendment in refund application in FORM GST RFD-01, to
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d of such pre-deposit amount, and
â⬢ issuance of a circular to clarify issues regarding rate of interest on refund of pre-deposit.
6.4. These measures will streamline and expedite refund processing through greater automation and reduced manual intervention, thereby facilitating timely sanction of eligible refunds and reducing compliance burden for taxpayers as well as interface with the department. Introduction of automation will ensure transparency, certainty, and uniformity and will also improve cash flows for taxpayers.
A4. Reforms related to dispute resolution
7.1 The GST Council recommended issuance of a circular to provide comprehensive guidelines to the tax officers to streamline process of issuance of demand notices, adjudication orders and appeal orders, inter alia, covering issues relating to, quality of demand notices and adjudication/appeal orders, timely issuance such notices/orders, proper invocation of grounds of fr
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gwith interest and penalty, within the specified time limit.
â⬢ for a reduced penalty of 5% in non-fraud cases, where tax along with interest is discharged within 30 days (under section 73) or 60 days (under section 74A) of the adjudication order.
â⬢ removal of condition of minimum penalty of Rs. 10,000/-, in non-fraud cases.
7.3 The GST Council recommended reducing the maximum general penalty under section 125 of the CGST Act, 2017 from Rs. 25,000/- to Rs. 10,000/-.
7.4 The Council recommended amendment in the provisos to section 107(6) and section 112(8) of the CGST Act, 2017 to provide an upper limit of Rs.40 crore (Rs. 20 crore under CGST and Rs. 20 crore under SGST/UTGST) on the pre-deposit payable for filing an appeal before the Appellate Authority or the Appellate Tribunal, respectively, in cases where the order involves only penalty and no demand of tax. This will ease the financial burden on taxpayers and make it easier for them t
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inverted duty structure, the Council recommended that refund of ITC on capital goods will be spread over 60 months, and shall be available in respect of ITC availed on capital goods on or after 1^st April, 2027.
8.4 This will ease working capital constraints for taxpayers and remove blockage of ITC on account of input services and capital goods in such cases.
9. Rationalization of blocked ITC by amendment in section 17(5) of the CGST Act, 2017: The Council recommended amendment in section 17(5) of the CGST Act, 2017 to remove the restrictions on availment of ITC inter-alia on the supplies of 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. This will reduce the cascading of taxes and ensure a smoother flow of ITC across the supply chain.
B2. Reforms relating to exports/zer
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r, will be determined as per the default provision under section 13(2) of the IGST Act, 2017 i.e. the location of the recipient of such services. This will facilitate access to export-related benefits under GST for Indian service providers providing such services to foreign recipients.
â⬢ insertion of an explanation to section 16(1) of the IGST Act, 2017 to provide that in the cases where goods are supplied to an overseas buyer, but the delivery of goods is made to the said buyer in an SEZ/FTWZ, and the payment for such supply is received in convertible foreign exchange or in Indian Rupees wherever permitted by the RBI, then such a supply will be deemed to be supply of goods to an SEZ/FTWZ. This will provide certainty regarding zero rating benefit to Indian manufacturers making supply of goods for overseas buyers by making delivery to them in an SEZ/FTWZ for warehousing or further processing.
B3. Ease of living and doing business
11. Rationalization of pro
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various offences under section 132 of the CGST Act, 2017.
12. Rationalization of provisions relating to E-way Bill
12.1 The GST Council recommended amendments in section 68, section 129 and section 130 of the CGST Act, 2017 so as to inter-alia provide that, –
â⬢ a conveyance carrying goods can be intercepted only on specific intelligence and with the authorisation of an officer not below the rank of Joint Commissioner.
â⬢ Inspection and further action for detention or seizure can be taken when either the supplier, or the recipient, is located or registered in the State where interception is being made. No interception in the transit States.
â⬢ Where no e-way bill has been generated, or the conveyance is not carrying any document to show the origin or destination of the goods, as the case may be, the goods can be inspected, detained or seized, irrespective of the jurisdiction.
â⬢ Provision of confiscation of goods/c
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decision on such objection.
15. Extending relief for small taxpayers on late fees: The GST Council recommended waiver of late fee on delayed filing of return under section 39(1) of the CGST Act, 2017, for taxpayers with an annual turnover up to Rs. 5 crore in the preceding financial year, if the said delayed return is filed by the end of the month in which it was due.
16. Clarification in respect of various issues through circulars: The GST Council recommended issuance of circulars to provide clarity and to remove ambiguities arising due to varied interpretations by the field formations, in respect of the following issues:
â⬢ Issues relating to Input Service Distributor (ISD) mechanism for distribution of input service credit.
â⬢ Availment of input tax credit by banking companies and financial institutions including NBFCs who opt for section 17(4) of the CGST Act, 2017.
â⬢ Various issues relating to payment of pre-deposits.
Ã
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elating to time limit for availment of input tax credit under section 16(4) of the CGST Act, 2017.
â⬢ amendment in section 9(5) of the CGST Act, 2017, to provide clarity regarding liability of the ECO to pay tax for the notified services, irrespective of the business models being followed by him.
â⬢ introduction of a validation clause in CGST Act, 2017, for validation of notices which have been held invalid by various courts on the ground of having been issued for multiple financial years.
â⬢ extending e-invoicing to domestic supplies received from an unregistered person where the tax is payable under reverse charge mechanism, as well as to the import of services, for taxpayers having aggregate annual turnover of Rs. 5 crore and above.
19. The Council approved various amendments to the CGST Act, 2017 and the GSTAT (Appointment and Conditions of Service of President and Members) Rules, 2023 to align the provisions in respect of the GST Appell
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ed bio-stimulants, which are registered under Schedule VI to the Fertiliser (Inorganic, Organic or Mixed) (Control) Order, 1985, are classifiable under heading 3101 as fertilisers. Further, it has been decided to regularise the past cases on “as is where is” basis (Explanation to be inserted in Sr. No. 237 of Schedule I of notification No. 09/2025-CTR).
4. To clarify that the suppliers of second-hand vehicles, under the GST margin scheme, are allowed to avail Input Tax Credit (ITC) on various inputs (other than second-hand vehicles) or input services such as spares, repair and maintenance services, technology services, rent, marketing and advertisement services, etc. The restriction on availment of ITC under the said scheme applies only on the tax paid on the procured second-hand vehicles. [notification No. 8/2018-Central Tax (Rate), notification No. 9/2018-Integrated Tax (Rate) and notification No. 1/2018-Compensation Cess (Rate)].
5. To bring waste and s
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he Compensation Cess not levied by the Canteen Stores Department (CSDs) on two and four wheelers for the period 01.07.2017 to 30.09.2022, and by CSDs and Unit Run Canteens on aerated drinks for the period 01.07.2017 to 31.03.2022.
C2. Recommendations relating to services
1. Passenger transport and rental of motor vehicles using Electric Vehicles
â⬢ To provide an option to pay GST at the rate of 5%, with restricted input tax credit, on passenger transport services and rental services of motor vehicles with operators, where the service is supplied using an electric vehicle, and the cost of battery charging is included in the consideration.
2. Transportation and delivery services supplied through Electronic Commerce Operators
â⬢ To bring delivery services, other than courier and postal, supplied through an ECO under Section 9 (5) of CGST Act, 2017, where the person supplying such services is not liable for registration un
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of business, for the supply of restaurant/outdoor catering services, hotel accommodation services for value up to Rs. 7500 per unit per day, and gym/fitness services in the same manner as is currently available for passenger transportation services, tour operator services and renting of motor vehicles services.
5. Transport of passengers by Helicopters from/to specified states
â⬢ To exempt from GST, the services of passenger transportation by helicopter on seat-sharing basis from/to airports/helipads located in north-eastern states, Sikkim and Bagdogra in West Bengal.
6. Storage or warehousing of seeds meant for sowing:
â⬢ To exempt from GST, the services by way of storage or warehousing of seeds meant for sowing.
7. Curing of coffee
â⬢ To exempt from GST, the agricultural support services of curing coffee provided by the coffee curers to the cultivators.
8. Taxability of the services of Se
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Upfront/concession amount paid to NHAI under Toll Operate Transfer Model for highway projects
â⬢ To exempt from GST, the services of the grant of exclusive right, license and authority by the Government including local Authority, governmental authority and government entity to the concessionaire for highway projects to demand, collect and appropriate toll fee.
12. Operation and Maintenance services for highway projects under TOT model
â⬢ To provide a special procedure regarding the valuation and time of payment of GST on Operation and Maintenance (O&M) services provided by concessionaires to the concessioning authority for highway projects in TOT model.
13. Fund Transfer Pricing mechanism in banks
â⬢ To clarify that the notional amount regarded as “interest” in the books of accounts for the activity of notional transfer of funds between the branches of the banks by the head office as part of Funds Transfer Pricing transact
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