57th GST Council Meeting

At its 57th meeting, in New Delhi on 8 October 2026, the GST Council made no change to the rate structure, which the 56th meeting fixed in September 2025, and recommended changes to how GST is administered after a return is filed. The recommendations deal with arrest, notices, input tax credit and refunds. The reasons given for the individual recommendations are to reduce mismatches and the notices that arise from them, to reduce blocked credit, and to reduce officer intervention in refunds and registration.

• Coercive powers. The recommendations reduce coercive powers: the power to arrest is withdrawn, the monetary threshold for prosecution rises to ₹5 crore, no notice is issued where the tax is below ₹10,000, penalties are reduced, and goods in transit can no longer be stopped at random.
• Automatic processing. Registration amendments, cancellation, refunds of cash balances and 90% provisional refunds are to be processed automatically on the portal, and the officer is involved only where the system flags a risk.
• Input tax credit. The recommendations make more input tax credit available: several restrictions under section 17(5) are removed, inverted-duty refunds extend to input services and capital goods, and from the return for April 2027 new rules and forms are to provide for correcting mismatches in GSTR-3B, so that fewer demand notices arise from mismatches.

Changes made by rule amendment, rate notification or circular apply from notification. Changes that need an amendment to the Act apply at the earliest after the next Finance Act is passed and notified. Some steps can be taken now, under existing law or in preparation.

The Council recommended complete withdrawal of the power to arrest by omitting section 69 of the CGST Act. It also recommended changes to prosecution under section 132.

• Threshold: the monetary threshold for prosecution rises to ₹5 crore. Under s.132(1) as it stands, the general threshold is ₹2 crore (clause (ii)); ₹1 crore applies only to issuing invoices without supply under clause (b) (clause (iii)); and falsifying records under clause (f) carries no money threshold (clause (iv)). The ₹2 crore general threshold dates from the Finance Act, 2023, in force from 1 October 2023.
• Offences removed: clause (i) of s.132(1) is omitted; "evades tax" is deleted from clause (e); "or in any other manner deals with" is deleted from clause (h).
• Clause (c) narrowed: it will cover only fraudulent ITC taken without receipt of goods or services, or without an invoice or bill.
• Punishments: the punishment amounts for the offences are to be rationalised. The new amounts have not been specified.

It was reported that the minimum punishment is to be removed, so that the court decides in each case whether to impose a fine, imprisonment or both; the recommendations do not say this. Under s.132 as it stands:

• punishment clauses (i), (ii) and (iii) of s.132(1) (not the offence clause (i) that is to be omitted) provide imprisonment of up to five, three and one year respectively "and with fine", so a fine is mandatory on conviction;
• s.132(3) requires imprisonment under those clauses, and for a repeat offence under s.132(2), to be for not less than six months, unless the court records special and adequate reasons;
• clause (iv), for falsified records under clause (f), already provides imprisonment of up to six months "or with fine or with both".

The reported change would therefore correspond to omitting s.132(3) and replacing "and with fine" with words that leave the court a choice; neither of the two reports names the sub-section.

The Council's stated aim for the change is a progressive, trust-based regime that keeps effective deterrence against fraud and evasion. Under s.69(1), the Commissioner may authorise arrest where he has "reasons to believe" that a person committed specified offences under s.132; without that power, the department would enforce the law through adjudication and through prosecution, in which a court decides, rather than through custody at the investigation stage. According to the government's statement, as reported, the system can now match seller and buyer invoices and use network analysis to identify suspicious credit, and taxpayers who file late, make mistakes or pay late "will face recovery, interest and a proportionate penalty, and nothing beyond that".

Clause (c), as narrowed, covers fake ITC taken without goods, services or invoices, which is the fake-invoice fraud the department has acted against for years. The words "evades tax" and "deals with", under which almost any irregularity could be presented as a crime, are deleted, so disputes of genuine businesses are left to adjudication. The remaining offences are supplies without invoice, invoices without supply, fake credit, tax collected and not paid, refund fraud, falsified records and, under the narrowed clause (h), dealing in goods liable to confiscation, all of them deliberate, together with attempt and abetment under clause (l).

The recommendations do not affect search, inspection and seizure under s.67 or recovery powers, and prosecution still exists for the narrowed offences. Without s.69, any arrest in a GST fraud would have to be made under another statute; the recommendations do not address that. Section 132(4) makes offences under the Act non-cognizable and bailable, except that s.132(5) makes offences under clauses (a) to (d) of s.132(1) cognizable and non-bailable where the amount exceeds ₹5 crore, and s.132(6) requires the Commissioner's previous sanction for prosecution. Neither the recommendations nor the reports say whether s.132(5) keeps the largest offences cognizable after s.69 is omitted.

The Council recommended amending ss.73, 74 and 74A so that no notice issues in small disputes and disputes that do arise can be closed at lower cost. According to the government's statement, as reported, system-generated notices on differences between returns number about 95,000 a year, with recovery of about 0.08% of the amount involved, and many of the cases arise from data-entry errors.

A circular will also set standards for notices, adjudication orders and appeal orders: quality, timeliness, personal hearings, and invoking fraud, wilful misstatement or suppression only on the merits of each case. A validation clause will revive notices that courts struck down for covering multiple financial years.

It was reported that the standards for notices also cover pre-notice intimation, "giving taxpayers an opportunity to respond before a formal notice"; pre-notice intimation is not among the recommendations. Under rule 142(1A) of the CGST Rules, the proper officer "may" communicate the tax, interest and penalty in Part A of FORM GST DRC-01A before serving a notice under section 73(1), 74(1) or 74A(1). The rule said "shall" until Notification 79/2020-Central Tax of 15 October 2020 substituted "may". The reports do not say whether the standard will be issued only as a circular or whether rule 142(1A) will again require the intimation.

In Goodluck India Ltd v. Union of India, 2026 INSC 821 (6 August 2026), the Supreme Court held that a rule omitted without a saving clause cannot sustain pending proceedings, because s.6 of the General Clauses Act does not apply to rules. For an amendment to the Act, s.6 generally saves pending proceedings, so for pending small cases to get the new ₹10,000 minimum, the Act must say so expressly, as the Council has recommended.

If the validation clause is retrospective, taxpayers who succeeded on the argument that a single notice cannot cover several years will no longer be able to rely on it; the Council has not said whether the clause is retrospective. The relief on small notices and the cure for defective large notices are recommended together.

The 5% penalty and the deemed "charge" both benefit a taxpayer who pays early, and may make early settlement of routine demands the cheaper option for both the taxpayer and the department.

The Council recommended amending sections 68, 129 and 130 of the CGST Act.

• Interception only on specific intelligence, authorised by an officer not below Joint Commissioner.
• Jurisdiction: inspection, detention or seizure only where the supplier or the recipient is located or registered in the intercepting State. No interception in transit States.
• Exception: where there is no e-way bill, or the vehicle carries no document showing origin or destination, goods may be inspected, detained or seized in any State.
• Confiscation under s.130 will not apply to goods or vehicles in transit.

The stated aim is smooth movement of goods and conveyances, and better supply and transport efficiency. At the briefing, the Finance Minister was reported as saying "No in-between stopping and checking" and "So, any random GST officer cannot stop a vehicle". The government was also reported as saying that documents will continue to be matched through the system and that physical inspection will follow information-based risk assessment.

A State may act only where its own taxpayer is the supplier or the recipient, that is, where the State has a revenue interest; the exception keeps the power of any State to act against goods moving without an e-way bill or a document showing origin or destination.

The recommendations change where and when goods may be stopped, but do not mention the amount of the penalty payable once a detention is valid. Under section 129(1) as it stands, from 1 January 2022 (Finance Act, 2021, brought into force by Notification 39/2021-Central Tax), goods and conveyances are released on payment of a penalty of 200% of the tax payable where the owner comes forward, or the higher of 50% of the value of the goods and 200% of the tax where the owner does not; for exempted goods, the penalty is 2% or 5% of the value, capped at ₹25,000.

Under section 17(5), read with the Explanation to section 17 (which excludes telecommunication towers and pipelines laid outside factory premises from "plant and machinery", so that s.17(5)(c) and (d) block their credit), the Council recommended removing, among others, the restrictions on credit for:

The list is given "inter-alia", so the final list may be longer; the final list will be fixed in the amending Bill.

For health and life insurance, General Insurance Council data, as reported, put group health premiums above ₹68,000 crore in FY26 and group premiums in life insurance at about ₹2.75 trillion, a figure that includes credit-life policies issued through lenders and not only employer cover.

Motor vehicles are not among the s.17(5) items listed for removal. It was reported that the Council will examine credit on motor vehicles through an officers' committee, to be taken up later; it is not among the recommendations. Under s.17(5)(a) as it stands, credit is blocked on motor vehicles for transport of persons with an approved seating capacity of not more than thirteen, including the driver, except where they are used for further supply of such vehicles, transport of passengers or driving training; s.17(5)(ab) blocks credit on general insurance, servicing, repair and maintenance of those vehicles, subject to its provisos.

Clause (ii) of the proviso to s.54(3) is to be amended to extend refunds of accumulated credit beyond input goods, to input services and capital goods.

Rule 86A is to confer on the taxpayer a right to object to a block on the electronic credit ledger and to a personal hearing before the officer decides the objection.

Under the rate recommendations, restaurant and outdoor catering, hotels up to ₹7,500 per unit per day, and gyms get limited credit for services in the same line of business. Passenger transport, tour operators and vehicle rental already have it.

The 56th meeting cut rates, which increased the inversion of duty for many goods; the Ministry of Finance acknowledged this in its FAQs on the 56th meeting's decisions and promised faster refunds. The 57th meeting's recommendations extend refunds to input services and capital goods, the parts of inverted-duty credit that could never be refunded. The 60-month spread on capital goods matches the asset's working life and limits the loss of revenue in any one year.

The 1 November 2026 and 1 April 2027 dates refer to when credit is availed, not to when the law is passed. 1 November 2026, three weeks after the meeting, comes before any Finance Act, so if the amendment, when enacted, keeps that date, credit availed on input services from November onwards will qualify.

The Council recommended amending section 54 and the rules so that refunds of cash-ledger balances, zero-rated supplies and inverted duty are processed by the system, in two phases.

Provisional refunds of 90% on the system's risk evaluation already exist. For zero-rated supplies, rule 91(2), as amended by Notification 13/2025-Central Tax from 1 October 2025, provides for the proper officer to sanction 90% by an order in FORM GST RFD-04 within seven days of acknowledgement, on the basis of the system's risk evaluation. For inverted-duty claims filed from 1 October 2025, Instruction 06/2025-GST (3 October 2025) applies the same method administratively, and the Finance Act, 2026 has amended s.54(6) to cover them, from a date still to be notified. As the recommendation is worded, Phase 1 adds sanction by the system itself, without an order from the officer.

It was reported that the provisional order is to issue within three working days of acknowledgement, and the Finance Minister was reported as saying that risk-based processing is expected to clear 90% of claims within three working days after acknowledgement. The release does not give this period.

• RFD-01 is to become system-readable, and scanned documents are no longer to be uploaded for zero-rated and inverted-duty claims.
• Rule 89(4)(C): the cap that limited zero-rated turnover of goods to 1.50 times the value of like goods supplied domestically is to be removed.
• Section 54(14): the ₹1,000 minimum is to apply to CGST, SGST/UTGST and IGST together, not per head. At present it applies to each tax head separately (Circular 125/44/2019-GST, para 60). The Finance Act, 2026 has also removed the minimum for refunds on goods exported with payment of tax, from a date still to be notified.

On appeals, the Council recommended that s.115 become a standalone provision fixing the interest rate on refunds of pre-deposit, with a circular to clarify past disputes.

In Phase 2, zero-rated claims get full automatic sanction but inverted-duty claims do not. Export refund claims are supported by external evidence, namely shipping bills for goods and bank realisation or inward remittance certificates for services (rule 89(2)(b) and (c)), while inverted-duty claims are based on a statement of domestic invoices (rule 89(2)(h)), so the likely design choice is full automation where the claim can be verified against outside data.

Under "risk evaluation by the system", the risk score determines which claims wait, so the speed of a taxpayer's refund will depend less on the officer and more on the quality of its data, namely GSTR-1 matching GSTR-3B, timely filing, matched e-invoices and e-way bills, and no flagged suppliers. Removing the 1.50x cap removes a frequent ground for reducing the export refunds of exporters who also sell the same goods domestically at lower prices.

The Council recommended a set of rule and form changes to keep liability and credit in GSTR-3B aligned with GSTR-1/1A/IFF and GSTR-2B. It recommended that they apply from the return for April 2027, after a time-bound public consultation. The Finance Minister may approve changes based on stakeholder feedback.

A circular will set out how to report ITC and reversals in 3B in the context of IMS and the statements under rules 86C and 86D.

According to the Council, these measures will considerably reduce mismatches in liability and ITC, and with them the demand notices and system-generated intimations they cause, and will improve the integrity of credit across the supply chain.

Automatic refunds depend on risk scores, which depend on matched data; the refund changes therefore depend on these return changes. The ₹10,000 notice minimum removes the smallest mismatch cases; the new statements are meant to stop the larger ones from arising. The limit on how long a credit note may stay pending on IMS indicates a concern that pending credit notes delay reversal of credit.

Rule 14A, introduced after the 56th meeting, provides automatic registration for applicants who will not pass on more than ₹2.50 lakh of ITC a month. At the 57th meeting, the Council recommended extending the same test to amendments, cancellation and e-commerce.

Registration and amendment

• A circular and FAQs are to list the documents needed; REG-01 gets drop-down boxes for each document; the portal gets guided filing.
• Rule 19: amendments to any registration particular are accepted automatically, except the Principal Place of Business. For rule 14A registrants, even the PPoB change is automatic. Changes in trade name, directors or partners and additional places of business were reported among the amendments to be accepted automatically.

Cancellation

E-commerce sellers (new rule 14B)

• A small supplier selling goods through an e-commerce operator in a State where it has no place of business can register there by declaring the operator's warehouse as its PPoB.
• The test is that no more than ₹2.50 lakh of ITC is passed on in a month, excluding stock transfers to its own branches. One report stated the ₹2.50 lakh test in terms of turnover; the recommended test is ITC passed on, and that test applies.
• Registration is automatic, subject to conditions. As reported, and attributed to the Council, the seller must keep a physical presence in at least one State, which remains its home State; it may hold one registration per PAN in a State, limited to supplies made through platforms; the operator's consent will be given automatically by the system; and a seller who exceeds the ₹2.50 lakh threshold comes under ordinary registration.

Delivery services through e-commerce (from the rate recommendations):

• Delivery services other than courier and postal, supplied through an e-commerce operator by a person not liable to register, come under s.9(5): the operator pays the tax.
• Delivery of goods ordered through an operator: 5% without ITC.
• The GTA exemption for transport to unregistered persons (Entry 21A) no longer applies to goods ordered through an operator.
• Section 9(5) itself is to be clarified so the operator's liability does not depend on its business model. The Council was reported as saying that platforms built on different commercial models had read the provision differently, so that the same delivery to the same customer was taxed differently, and that "the same delivery will bear the same tax, whichever way it is routed"; ride-hailing platforms with commission and subscription models were reported as an example.

As reported, about 61% of registrations are already granted automatically, a figure attributed to the Council. According to the government's statement, as reported, about 90% of taxpayers seeking cancellation have never passed on more than ₹2.50 lakh of credit in a month, and more than 90% of sellers supplying through platforms are below ₹2.50 lakh a month.

The government uses the ₹2.50 lakh figure to separate lower-risk from higher-risk taxpayers: applications below it are accepted automatically, without an officer, while above it an officer still checks, because the risk is that the registration exists to pass on credit. Rule 14B allows a small seller to register in every State in which it sells through a marketplace; s.9(5) and the delivery-service changes make the marketplace operator the person who pays the tax on delivery services connected with those sales.

On export receipts, the government was reported as saying that the time at which an export payment is counted as received will follow the Reserve Bank of India's rules, so that one standard applies instead of two.

For cross-border supplies, Schedule II is also to treat any transfer of title in intellectual property rights, temporary or permanent, as a supply of services, and import of services by an Indian establishment of a foreign shipping line from a related person abroad, without consideration, is exempted, with the past regularised.

The Finance Act, 2026 omitted IGST s.13(8)(b) with effect from 30 March 2026, the date of assent; its commencement clause defers only the CGST amendments in sections 153 to 155. Since then, the place of supply of intermediary services has been the recipient's location under s.13(2), and Indian intermediaries serving foreign clients can treat those services as exports. That change was recommended at the 56th meeting and is not part of the 57th package.

Rule 96(10): retrospective omission. Rule 96(10) restricted IGST refunds on exports for exporters whose inputs came under specified concessional schemes. It was omitted by Notification No. 20/2024, effective 8 October 2024. In Goodluck India Ltd v. Union of India, 2026 INSC 821, a two-judge bench applied Kolhapur Canesugar Works (2000) 2 SCC 536: a rule omitted without a saving clause cannot sustain pending proceedings. So the omission benefited every proceeding pending on 8 October 2024. The Court dismissed the exporters' own challenge to the rule's validity as infructuous.

At its 57th meeting, the Council recommended omitting rule 96(10) with effect from 23 October 2017, "in accordance with" that decision. That date matches Notification 40/2017-Central Tax (Rate) and 41/2017-Integrated Tax (Rate) of 23 October 2017, the concessional-supply notifications that rule 89(4B) also referred to until the same Notification 20/2024 omitted it. Rule 96(10) itself applied from 23 October 2017: Notification 75/2017-Central Tax first inserted the restriction as rule 96(9), and Notification 3/2018-Central Tax recast it as rule 96(10), both with effect from that date. An omission from 23 October 2017 therefore removes the rule from its first day.

The rule in Goodluck India applies only to proceedings pending on 8 October 2024, whereas an omission from 23 October 2017 extends, apparently, to every refund to which the rule ever applied. On one reading, the government ends all remaining rule 96(10) litigation, including recovery proceedings it would otherwise have pursued; on the other, exporters whose matters closed against them before 8 October 2024 may also seek relief. Which reading applies will depend on the notification's wording.

The Council has not said which reading it intends, and it has not said whether refunds already recovered will be repaid.

There is no change to the 5% / 18% / 40% structure set at the 56th meeting (Notification 09/2025-Central Tax (Rate) also keeps special rates of 3%, 1.50% and 0.25% for a few goods). The rate recommendations settle classification disputes, change collection rules where tax is going unpaid, and provide for targeted exemptions.

"The rate structure is settled, so the Council has turned to how the tax works day to day," the Finance Ministry was reported as saying. It was also reported that rate changes will in future be taken up once a year, at a meeting held only for rates; that is a statement of practice, not a rule, and it is not among the recommendations.

The Finance Ministry's statement, as reported but not published on PIB, gave growth figures and the effective tax rate:

• growth in taxable supply of more than 25% in FY26, against 13% in FY 2024-25;
• GST revenue growth of 11% for the current year to date (14.70% year on year for June to August);
• an effective tax rate on domestic supplies of 13.13%, down from 14.55%.

The Finance Minister was reported as saying that the 2025 rate cut had not reduced revenue.

Goods

Services

It was reported, citing sources, that the exemption for storage and warehousing of seeds for sowing will be made by amending Entry 24B of Notification 12/2017-Central Tax (Rate). Officials were quoted as saying that seed for sowing is graded, treated and packed and so fell outside the existing entry for agricultural produce, that the exemption will depend on what the goods are rather than how far they have been processed, and that "the meaning of seed is drawn from the seeds law". Coffee curing is to be exempted, officials said, because it is carried out at a separate unit and so fell outside the general exemption for services relating to cultivation. The amendment to Entry 24B has not been issued.

For scrap, under RCM the buyer pays tax on purchases from unregistered collectors, the first sellers in the scrap supply chain, even if the supplier is below the threshold, and 2% TDS creates a record of B2B trades.

₹5 crore of turnover separates small taxpayers from large ones: below it, the recommendations give relief through a late-fee waiver and an option of fewer returns for pure B2C sellers; above it, they add reporting through e-invoices on RCM and import transactions, which include these transactions in the e-invoice data the system can match.

It was reported that businesses in the ARQP scheme would file one return a year and pay tax every quarter, and that the detailed framework and the required amendments are to be placed before the next Council meeting.

The Council also recommended:

• aligning ss.16, 37 and 39 so that the time limits for GSTR-1 and the return match the s.16(4) time limit for taking credit;
• issuing clarifications by circular on ISD distribution, credit for banks and NBFCs that opt for s.17(4), pre-deposits and demo vehicles; and
• aligning the GST Appellate Tribunal provisions with the Tribunals Reforms Act, 2026 and its 2026 rules.

The Council recommends; Parliament, State legislatures and the government implement. None of the 57th meeting's recommendations is law yet, and most items need amendments to the CGST and IGST Acts, which means a Finance Bill in Parliament and matching State SGST amendments. The release itself states that the decisions take effect only through circulars, notifications and law amendments. As of 9 October 2026, no FAQs, minutes, notifications or circulars on the meeting had been issued.

In Goodluck India Ltd v. Union of India, 2026 INSC 821 (6 August 2026), the Additional Solicitor General conceded before the Supreme Court that a Council recommendation is advisory and need not be accepted. The Court held that the 54th Council's recommendation to omit rule 96(10) "prospectively" did not bind the rule-making authority.

Changes made by amending the rules can take effect quickly. Changes that need an amendment to the Act, including the arrest and prosecution reforms, will not apply to anything until the amending law is in force. Until then, s.69 remains on the statute book, and so do the present prosecution threshold and the present text of s.132. Do not advise any client on the new position for a live matter yet.

Only five dates between August 2026 and April 2027 are fixed by the Council's recommendations or the Court:

Every other change depends on an amending Act or notification.

It was reported on 8 October 2026 that the process changes are to come into force from 1 April 2027, in stages, and that the Finance Minister expects them to take about a year to stabilise; the recommendations give no such date. A start on 1 April 2027 would match the usual practice of amending the CGST Act through the Finance Act passed after the Union Budget in February; no report attributes that reasoning to the government.

Rule 96(10) is to be omitted with effect from 23 October 2017, and Notification 20/2024 omitted it from 8 October 2024. The arrest, prosecution, notice, penalty, s.17(5), export and e-way bill changes have no date until Parliament passes the amending Bill.

Until a notification or Act is in force, the present law applies. Several changes, such as the s.17(5) credits, will be available only from their effective date, and taking them early is likely to result in a demand.