57th GST Council Meeting Recommendations: Key Changes Explained
October 13, 2026 · GST
57th GST Council meeting recommendations: proposed removal of arrest powers, INR 5 crore prosecution threshold, faster refunds and wider ITC.
The 57th GST Council meeting recommendations , announced on October 8, 2026, focus on process reform rather than rate changes. The Council has recommended removal of arrest powers under GST, a higher prosecution threshold, lower general penalties, faster system-based refunds, automatic registration amendments and wider input tax credit (ITC). These are recommendations only: as of October 13, 2026, they take legal effect only when the relevant CGST/IGST Act amendments, rules, notifications and circulars are issued. Every GST-registered business, exporter, e-commerce seller and finance team should track them closely.
What the 57th GST Council meeting changed
The 57th meeting was held in New Delhi on October 8, 2026. According to the official press release, the 56th meeting focused on rate rationalisation, while the 57th meeting covered registration, returns, refunds, adjudication, export facilitation, compliance relief and certain rate clarifications. FAQs on the recommendations of the GST Council made in its 57th meeting on October 8, 2026 have been published on the GST Council website, covering GST law and procedures and rate changes on goods and services.
The press release itself states that the recommendations "would be given effect through the relevant circulars/ notifications/ law amendments which alone shall have the force of law". Many items need amendments to the CGST Act, 2017 or IGST Act, 2017, so they will likely require Parliament to pass the changes, often through a Finance Act. No implementing notification for most items had been located on cbic-gst.gov.in as of October 13, 2026 (e-gazette not searched).
Key GST Council recommendations: thresholds and dates
Category
Earlier position
Revised position (recommended)
Effective from
Arrest powers (section 69, CGST Act)
Arrest permitted for specified offences
Section 69 to be omitted
On law amendment
Prosecution threshold (section 132)
INR 1,00,00,000/-
INR 5,00,00,000/-
On law amendment
General penalty (section 125)
Up to INR 25,000/-
Up to INR 10,000/-
On law amendment
Minimum tax for show cause notice (sections 73, 74, 74A)
No minimum threshold
No notice if tax involved is below INR 10,000/-, including pending matters
On law amendment
Penalty in non-fraud cases
Minimum penalty of INR 10,000/-
Minimum removed; 5% penalty if tax and interest paid within 30 days (section 73) or 60 days (section 74A) of the order
On law amendment
Pre-deposit cap, penalty-only orders (sections 107(6), 112(8))
-
New cap of INR 40,00,00,000/- (INR 20 crore CGST plus INR 20 crore SGST/UTGST) proposed for penalty-only orders
On law amendment
Refund acknowledgement or deficiency memo
15 days
10 days, with deemed acknowledgement
Phase 1, date to be notified
Provisional refund (zero-rated and inverted duty)
Officer-processed
90% sanctioned automatically on system risk evaluation
Phase 1, date to be notified
Refund of ITC on input services (inverted duty structure)
Not refundable
Refundable
ITC availed on or after November 1, 2026
Refund of ITC on capital goods (zero-rated and inverted duty)
Not refundable
Refundable, spread over 60 months
ITC availed on or after April 1, 2027
Alternate mechanism for amending liability and ITC in returns
Not available
New rules 61(1A), 61(1B), 86C, 86D and IMS changes
May be brought into force from the return for April 2027, after time-bound public consultation
Late fee on delayed return under section 39(1)
Late fee applicable
Waived for turnover up to INR 5,00,00,000/- if filed by end of the due month
To be notified
GST process reforms for registration, returns and refunds
GST registration amendments and cancellation
Rule 19 of the CGST Rules, 2017 is proposed to be amended so that amendments to all registration particulars, other than the Principal Place of Business (PPoB), are accepted automatically on the portal. For persons registered under rule 14A, PPoB amendments would also be automatic. Applications for cancellation in FORM GST REG-16 are to be accepted automatically once pending returns are filed and dues paid, in two phases.
A new rule 14B is proposed for small sellers supplying goods through e-commerce operators in States where they have no physical presence, allowing the ECO warehouse to be declared as PPoB where ITC passed on does not exceed INR 2,50,000/- per month (excluding stock transfers between distinct persons). Registration under the proposed rule will be granted automatically by the system, subject to certain conditions.
GSTR-1, GSTR-3B and IMS reconciliation
The Council recommended tools to reduce mismatches between FORM GSTR-1/1A/IFF, FORM GSTR-2B and FORM GSTR-3B, including an "Electronic Credit Reversal and Reclaim Statement" (rule 86C) and an "Electronic Statement of tax paid on Reverse charge basis and input tax credit claimed" (rule 86D). These, along with rules 61(1A), 61(1B) and IMS changes, may be brought into force from the return for April 2027, after time-bound public consultation.
Faster GST refunds for exporters
Refund of excess balance in the electronic cash ledger is to be sanctioned automatically. The cap in rule 89(4)(C) linking zero-rated turnover of goods to 1.5 times the value of like domestic goods is proposed to be removed. The INR 1,000/- threshold in section 54(14) is to apply to the combined CGST, SGST/UTGST and IGST refund amount.
Input tax credit, exports and decriminalisation
Blocked credits under section 17(5)
Restrictions on ITC are proposed to be removed for, among others, outdoor catering, health and life insurance, telecommunication towers, pipelines laid outside factory premises, free samples, and goods destroyed or written off on expiry of shelf life as required by law.
Export of services to foreign branches
Omission of section 2(6)(v) of the IGST Act, 2017 is recommended, so that services supplied to a foreign office or branch of the same entity may qualify as export of services. Section 13(3)(a) of the IGST Act is also proposed to be omitted, so that the default place of supply rule under section 13(2) applies.
E-way bill interception
Interception of conveyances is proposed only on specific intelligence with authorisation of an officer not below Joint Commissioner, and no interception in transit States where neither supplier nor recipient is located, except where no e-way bill or documents are carried.
Practical impact
For companies
Companies with inverted duty structures or exports should map input service ITC from November 1, 2026 and capital goods ITC from April 1, 2027 (refund of capital goods ITC is spread over 60 months), as these dates may affect future refund claims. Finance teams should review open show cause notices below INR 10,000/- and ITC currently blocked under section 17(5), while waiting for the formal amendments before changing any filing position.
For small businesses and individuals
Proprietors and small taxpayers with turnover up to INR 5,00,00,000/- may benefit from the proposed late fee waiver and the optional Annual Return Quarterly Payment (ARQP) scheme for B2C suppliers, which is so far only an in-principle concept note. Online sellers should watch for rule 14B, which may simplify registration in additional States.
Frequently asked questions
Are the 57th GST Council recommendations already in force?
No. As of October 13, 2026, they are recommendations. They become law only through notifications, circulars or amendments to the CGST and IGST Acts.
Has arrest under GST been abolished?
The Council has recommended omission of section 69 of the CGST Act, 2017. Until the amendment is enacted and notified, the existing provision continues.
What is the new GST prosecution threshold?
The Council recommended raising the monetary threshold for prosecution from INR 1,00,00,000/- to INR 5,00,00,000/-.
From when can ITC on input services be refunded under inverted duty structure?
The recommendation cove