57th GST Council Meeting: Key Relief for Businesses Explained
October 25, 2026 · GST
57th GST Council meeting recommends no GST arrests, prosecution only above INR 5 crore, lower penalties and faster refunds. What it means.
The 57th GST Council meeting , held on October 8, 2026, recommended the removal of arrest powers under GST, a higher prosecution threshold of INR 5 crore, a lower general penalty, no show cause notice where tax is below INR 10,000/-, late fee relief for small taxpayers and faster refunds. These are recommendations only: they take effect once the relevant notifications, circulars or amendments to the CGST Act, 2017 are issued. The changes are relevant to most GST-registered businesses.
Quick answer: the 57th GST Council meeting proposes softer enforcement and faster refunds. As of October 25, 2026, the existing law still applies.
A story to start: one small business, five GST worries
Consider a hypothetical example. A small packaging firm in Surat makes jewellery boxes and display trays for jewellers. Its owner, call him Kiran, has an annual turnover of about INR 3 crore and is registered under GST.
This year he has five worries: a tax mismatch of about INR 8,500/-, one GSTR-3B filed a few days late, a truck to Delhi stopped in Rajasthan, an excess balance stuck in his electronic cash ledger, and stories of GST arrests. Each worry maps to one recommendation.
What has changed: GST Council recommendations October 2026
In plain English, the Council wants lighter enforcement for honest, small cases and focus on serious fraud. The official press release (PIB Release ID 2320934) names the provisions to be amended.
GST arrest provision to be removed: section 69
The Council recommended complete withdrawal of arrest powers under GST by omission of section 69 of the CGST Act, 2017. Prosecution may still be launched before a court where the amount involved exceeds INR 5 crore.
GST prosecution limit 5 crore: section 132
The monetary threshold for prosecution is to be raised to INR 5 crore. The official release describes the present threshold as INR 1 crore; under the current section 132(1), INR 1 crore applies to fake invoice offences under clause (b), while most other offences carry imprisonment only above INR 2 crore. Certain offences in section 132(1) are to be omitted or narrowed, and clause (c) is to cover only fraudulent input tax credit (ITC) claims without goods, services or an invoice.
The official FAQs add that courts would get discretion to impose only a fine. The minimum imprisonment of six months under section 132(3) is to be removed.
Lower general penalty: section 125
The maximum general penalty under section 125 of the CGST Act, 2017 is to be reduced from INR 25,000/- to INR 10,000/-. This penalty applies to contraventions for which no separate penalty is provided.
No show cause notice below INR 10,000/-: sections 73, 74 and 74A
Sections 73, 74 and 74A are to be amended so that no show cause notice is issued where the tax involved is less than INR 10,000/- (CGST, SGST, IGST and cess taken together). Notices and appeals below INR 10,000/- pending when the provision comes into force are to be decided as if the threshold had applied when the notice was issued.
In non-fraud cases, the penalty is to be 5% where tax and interest are paid within 30 days (section 73) or 60 days (section 74A) of the order. The minimum penalty of INR 10,000/- in such cases is to go.
Late fee waiver for small taxpayers: section 39(1)
Late fee on a delayed return under section 39(1) is to be waived for taxpayers with turnover up to INR 5 crore in the preceding financial year. The return must be filed by the end of the month in which it was due.
Faster, automatic refunds: section 54
Section 54 and the CGST Rules, 2017 are to be amended for system-based refunds in two phases. In Phase 1, excess electronic cash ledger balance is to be refunded in full automatically, and the time for acknowledgement or deficiency memo is to fall from 15 days to 10 days.
For refunds on zero-rated supplies and inverted duty structure, 90% of the claim is to be sanctioned provisionally by the system, based on risk evaluation. Phase 2 would bring system-based acknowledgement and automatic full refunds on zero-rated supply claims, after adjusting pending dues and based on risk evaluation.
E-way bill checks only on specific intelligence: sections 68, 129 and 130
A vehicle could be intercepted only on specific intelligence, with authorisation of an officer not below the rank of Joint Commissioner. Only the State where the supplier or recipient is located or registered could inspect, detain or seize goods; there would be no interception in transit States.
Confiscation under section 130 would not apply to goods in transit. Where no e-way bill is generated, or no document shows origin or destination, goods could still be detained anywhere.
Key dates and rates
Category
Earlier position
Revised position
Effective from
Arrest (section 69)
Arrest powers available
Section 69 to be omitted
Once the CGST Act is amended and notified
Prosecution threshold (section 132)
INR 1 crore for fake invoices; INR 2 crore for most other offences
INR 5 crore
Once the CGST Act is amended and notified
Maximum general penalty (section 125)
INR 25,000/-
INR 10,000/-
Once the CGST Act is amended and notified
Show cause notice (sections 73, 74, 74A)
No statutory minimum tax amount for a notice
No notice if tax is below INR 10,000/-
Once the CGST Act is amended and notified
Late fee on return under section 39(1)
Late fee payable
Waived if turnover up to INR 5 crore and filed by month end
Not announced; awaits notification
Cash ledger refund (section 54)
Refund on application, sanctioned by the proper officer
Full refund sanctioned automatically
Once section 54 and the CGST Rules are amended and notified
Zero-rated and inverted duty refunds
Zero-rated supplies: 90% provisional refund ordered by the proper officer (section 54(6), rule 91). Inverted duty: processed by the proper officer
90% provisional refund sanctioned automatically by the system, without officer intervention
Once section 54 and the CGST Rules are amended and notified
Vehicle interception (sections 68, 129)
Any proper officer could intercept a vehicle at any place, including in a transit State (section 68(3))
Only on specific intelligence with Joint Commissioner authorisation; no transit State action
Once the CGST Act is amended and notified
Practical impact of the 57th GST Council meeting
For small traders and manufacturers
Back to our example: Kiran's INR 8,500/- mismatch is below INR 10,000/-, so once the threshold is in force, no show cause notice would be issued. A notice pending then would be decided as if the threshold had applied.
His late GSTR-3B was filed within the same month, and his turnover is below INR 5 crore. Once notified, no late fee would apply, but the waiver is not law yet.
For businesses that move goods
Kiran's truck to Delhi carried an e-way bill and invoice, but the e-way bill showed a wrong HSN code. Today, a Rajasthan officer could detain it. Under the proposal, Rajasthan, as a transit State, would have to let the truck pass and send the information to the officer of Gujarat or Delhi.
For exporters and businesses with refunds
Kiran's excess cash ledger balance would be refunded automatically once Phase 1 is implemented. Exporters already get 90% provisionally from the officer; under the proposal, the system would sanction 90% automatically on low-risk zero-rated and inverted duty claims, which should speed up cash flow.
For anyone worried about arrest
Once enacted, GST officers would have no arrest power, and prosecution would be limited to cases above INR 5 crore. Until then, section 69 remains in the law.
Other business-wide recommendations, briefly
Automatic acceptance of registration amendments, except principal place of business (rule 19).
Section 17(5) to be relaxed: ITC to be allowed on items including outdoor catering, health and life insurance and free samples.
Inverted duty refund of ITC on input services availed on or after November 1,