57th GST Council Meeting: Key Recommendations

The GST Council held its 57th meeting on 8 October 2026 in New Delhi. The 56th meeting last year was mostly about rate cuts and rate rationalisation. This one was about something more day to day: how GST actually works for you when you register, file returns, claim a refund or get a notice from the department. If you run a shop, a small company, a startup or a freelance business, a few of these recommendations could change how you deal with the GST portal. If you are a commerce, CA, CMA or CS student, this is a good real-life case of how a GST rule gets changed.

Please read this before anything else: everything in this post is a recommendation of the GST Council. A recommendation is not law yet. It becomes law only after the government issues a notification or circular, or amends the CGST Act or Rules. Until then, the current GST rules continue to apply. Each section below tells you three things: what was recommended, what it means in plain words, and who it matters to.

What the GST Council is, and why a recommendation is not a rule yet

The GST Council is the body that decides how GST should work in India. It is chaired by the Union Finance Minister and includes the finance ministers of the states. When it decides something, the decision is called a recommendation.

A recommendation has to travel a few steps before it touches your business:

1. The Council recommends a change.
2. The government drafts the law change, the rule change or a circular.
3. The change is notified, or the Act is amended.
4. The GST portal is updated to match.

In simple words: the Council gives the direction and the notification gives the date. Until the notification comes, nothing changes for your return or your registration.

The 57th meeting at a glance

Late fee relief for small taxpayers

What was recommended

The Council recommended waiving the late fee on a delayed return filed under section 39(1) of the CGST Act. The relief is for taxpayers whose annual turnover in the previous financial year was up to ₹5 crore. The condition is that the delayed return is filed by the end of the month in which it was due.

In simple words: if you are a small taxpayer and you file a few days late, but still inside the same month, you may not have to pay the late fee.

An example

Say Ravi runs a trading business and his turnover last year was ₹2.8 crore. His return was due on the 20th and he files it on the 27th of the same month. Under this recommendation, no late fee would apply to him once it is notified. If Ravi files on the 2nd of the next month, the relief would not apply, because the return came after the month had ended. This is only an example to explain the idea. It is not a statement about any actual due date.

What the release does not say

• It talks about the late fee only. It does not mention interest on late payment of tax, so do not assume interest is waived.
• It names returns under section 39(1), which covers the regular periodic return. It does not mention other returns such as GSTR-1, which is filed under section 37.
• It gives no start date. That will come with the notification.

Who benefits

This mainly helps small traders, service providers, freelancers and startups with turnover up to ₹5 crore who now and then miss the due date by a few days.

Faster and more automatic GST refunds

Waiting for a refund blocks your working capital, and exporters feel this the most. The Council recommended that refunds should be processed by the system, with less need for an officer to step in. The plan has two phases.

In simple words: the portal will do more of the checking and approving, so refunds are meant to reach you faster.

Phase 1: the first changes

Excess balance in the electronic cash ledger

The electronic cash ledger is the account where you deposit cash to pay GST. If you deposit more than you needed, the extra balance can be claimed back. Under Phase 1, a full claim for this balance would be sanctioned automatically, without an officer.

Zero-rated supplies and inverted duty structure

Zero-rated supplies mostly means exports and supplies to SEZs. An inverted duty structure means the GST you pay on your inputs is higher than the GST you charge on what you sell.

For both kinds of refund claims, 90% of the amount claimed would be sanctioned provisionally and automatically, after a risk check by the system. For example, if you claim ₹10,00,000, the system could release ₹9,00,000 on a provisional basis.

Acknowledgement in 10 days

The time for the officer to issue an acknowledgement or a deficiency memo (a note listing what is missing in your application) would come down from 15 days to 10 days. If the officer does neither within 10 days, the system would treat the application as acknowledged.

Phase 2: more automation

• The system would give the acknowledgement on its own after verifying the application.
• For zero-rated supply claims that are acknowledged, the full refund would be sanctioned automatically, after adjusting any pending dues.
• Both steps depend on the system's risk evaluation.

Other refund changes

• Refund form RFD-01: details to be captured in a system-readable format, so you would not need to upload scanned documents for zero-rated and inverted duty claims.
• Rule 89(4)(C): the cap that limited the turnover of zero-rated supply of goods to 1.5 times the value of similar goods supplied within India would be removed.
• The ₹1,000 limit: a refund below ₹1,000 is not paid. The recommendation says this limit applies to the total of CGST, SGST or UTGST, and IGST taken together, and not to each tax separately.
• Interest on refund of pre-deposit: section 115 would become a standalone provision for the rate of interest, and a circular would clear the doubts.

Quick reminder on the three taxes: CGST and SGST are charged on sales within a state, and IGST is charged on sales between states and on imports. Refund of unused ITC on capital goods and input services is explained in the input tax credit section below.

Who this helps

Exporters of goods and services, manufacturers with an inverted duty structure, and any business that has put extra money in its cash ledger.

Notices, penalties, arrest and prosecution

This part of the meeting drew the most attention. The recommended changes aim to reduce litigation and fear for ordinary taxpayers, while keeping strong action against real fraud.

Show cause notices: a minimum of ₹10,000

A show cause notice is a letter from the tax department asking you to explain why you should not pay extra tax, interest or a penalty.

The Council recommended that no notice should be issued if the tax involved is below ₹10,000. This amount counts CGST, SGST, IGST and Cess together. Notices and appeals below ₹10,000 that are still pending when the provision starts would be decided as if the limit had applied from the beginning. For example, a demand of ₹8,000 would not lead to a show cause notice. A demand of ₹12,000 still could.

In simple words: very small tax demands should stop turning into notices.

Lower penalty if you pay quickly

• 5% penalty in non-fraud cases, if you pay the tax and interest within 30 days (under section 73) or 60 days (under section 74A) of the adjudication order. An adjudication order is the officer's formal decision on the demand.
• Where you voluntarily pay the full tax with interest and penalty within the time limit, the penalty amount would be treated as a ‘charge’. The release does not explain the effect in more detail.
• The minimum penalty of ₹10,000 in non-fraud cases would be removed.

General penalty: ₹25,000 to ₹10,000

Section 125 is the general penalty for a breach where the law gives no specific penalty. The Council recommended cutting the maximum from ₹25,000 to ₹10,000.

Appeals: a cap on the pre-deposit

To file an appeal you have to deposit part of the disputed amount first. This is called a pre-deposit. Where an order involves only a penalty and no tax demand, the pre-deposit would be capped at ₹40 crore (₹20 crore under CGST and ₹20 crore under SGST or UTGST), for appeals before the Appellate Authority or the Appellate Tribunal.

Blocked credit ledger: a right to be heard

Under rule 86A, an officer can block ITC in your electronic credit ledger. The Council recommended that you should be able to file an objection and get a personal hearing before the officer decides.

Better notices and orders

A circular would guide officers on the quality of demand notices and orders, issuing them on time, using fraud, wilful misstatement or suppression as grounds only when the facts support it, and giving a fair personal hearing. One recommendation works the other way. A validation clause would be added for notices that courts held invalid because they covered several financial years in one notice.

Arrest: section 69

The Council recommended complete withdrawal of arrest powers under GST, by omitting section 69 of the CGST Act.

Please note: arrest has not been removed yet. The law has to be amended first.

Prosecution: ₹1 crore to ₹5 crore

The monetary threshold for prosecution would go up from ₹1 crore to ₹5 crore. The Council also recommended changes to section 132, which lists the offences:

• Clause (i) of section 132(1) would be omitted.
• The words ‘evades tax’ would be deleted from clause (e), and ‘or in any other manner deals with’ from clause (h).
• Clause (c) would cover only fraudulent ITC claims made without receiving goods or services, or without an invoice or bill.
• The punishments for various offences would be revisited.

In simple words: the list of prosecutable offences gets narrower and the money limit gets higher. Fake invoices and fraudulent ITC are still treated as serious.

GST registration: simpler filing, changes and cancellation

Applying for a new registration

The portal already gives automatic registration, without an officer, under rule 14A when you do not plan to pass on more than ₹2.5 lakh of ITC per month. In plain terms, that is the tax in your invoices that your customers can claim as credit.

For the remaining applications, the Council recommended:

• A circular that lists the documents and information needed for registration, along with FAQs.
• Drop-down boxes in form REG-01, so you pick from the prescribed documents and the officer knows what to expect.
• A friendlier portal screen with clear steps, drop-down lists, tool-tips and guidance while you fill the form.

The aim is fewer rejections and fewer queries from officers.

In simple words: you should know exactly what to upload before you apply, and the application should move faster.

Changing details after registration

Under rule 19, the Council recommended that amendments to all registration details should be accepted automatically on the portal, except changes to the Principal Place of Business (PPoB), which is your main business address. For businesses registered under rule 14A, even a PPoB change would be accepted automatically. The result would be near real-time updates without waiting for an officer.

Cancelling a registration

The Council recommended making cancellation simpler, in two phases.

Phase 1

A cancellation application in form REG-16 would be accepted automatically once all pending returns are filed and all dues are paid, in these cases:

• You have not passed on ITC above ₹2.5 lakh in any month since registration.
• You did pass on more than ₹2.5 lakh in some month, but you filed your final return in form GSTR-10 within the specified time.

Phase 2

All cancellation applications would be accepted automatically once pending returns are filed and dues are paid. REG-16 would be changed so that you can give the GSTR-10 details in the same application.

Cancellation by the officer

• Some grounds for cancellation by tax officers would be removed from rule 21.
• Rules 21A and 22, and a new rule 23A, would allow system-based cancellation and revocation based on non-compliance and later compliance. The defaults named are not filing returns and not giving bank account details.

Two terms for students: GSTR-10 is the final return filed after cancellation, and revocation means getting a cancelled registration restored.

In simple words: if your returns are filed and your dues are paid, cancelling a registration should become mostly automatic.

Small sellers on e-commerce platforms: rule 14B

The 56th meeting had approved this idea in principle. Now the Council recommended a new rule 14B. A small supplier of goods who sells through an e-commerce operator (ECO), meaning an online marketplace, in a state where the seller has no physical presence, could register by declaring the ECO's warehouse in that state as the seller's Principal Place of Business. The conditions are that the seller does not plan to pass on more than ₹2.5 lakh of ITC per month, and stock transfers between distinct persons are not counted. Registration would be granted automatically, subject to conditions.

Why it matters: a small seller could sell to customers in other states through a platform without setting up a place of business in each state.

Who this helps

New businesses, small online sellers, and any taxpayer who has struggled with rejected applications or slow amendments.

GST returns: a new way to fix mistakes (proposed from April 2027)

The problem it tries to solve

Three things must agree with each other: GSTR-1 (your sales), GSTR-2B (the credit available to you) and GSTR-3B (the tax you pay and the credit you claim). When they do not match, the system can send intimations and notices. The Council recommended an alternate mechanism to correct liability and input tax credit (ITC) in returns, so that there are fewer mismatches and fewer notices. If you want to understand how matching works today, read our GST reconciliation guide.

What was recommended

When could this start?

The Council recommended that these provisions may come into force from the return of April 2027. It also recommended putting the revised mechanism in the public domain for a time-bound consultation, and it authorised the Union Finance Minister to approve changes based on the feedback.

That means the final version may differ from what is described here.

What you can do now

Nothing changes in how you file today. Keep your monthly habit of matching purchases with GSTR-2B and sales with GSTR-1 before you file GSTR-3B. That habit will help you when the new facility arrives.

Input tax credit (ITC): fewer blocks and more refunds

Input tax credit (ITC) is the credit you get for the GST you paid on business purchases. You set it off against the GST you owe on your sales. The Council recommended a few changes so that credit flows more smoothly.

Blocked credit: section 17(5)

Section 17(5) lists purchases on which you cannot claim ITC even though you paid GST on them. The Council recommended removing the restriction on ITC for, among other things:

• 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, where the law requires it

The release says ‘among other things’, so the list may include more items. The exact items and conditions will be clear only when the law is amended.

In simple words: the government wants to reduce tax on tax, which happens when credit gets blocked and the cost stays inside your price.

Limited ITC in the same line of business

The Council also recommended limited ITC in the same line of business for restaurant and outdoor catering services, hotel accommodation up to ₹7,500 per unit per day, and gym or fitness services. The release says this would work the way it already does for passenger transport, tour operator services and renting of motor vehicles. The detailed conditions will come with the notification.

Refund of accumulated ITC

Sometimes ITC piles up in your account because you export, or because the tax on your inputs is higher than the tax on your sales. This is called accumulated ITC. The Council recommended that it should be refundable in more cases:

• For zero-rated supplies, accumulated ITC on capital goods (machinery and equipment used in the business).
• For inverted duty structure, accumulated ITC on input services and capital goods.

Who this helps

Exporters, manufacturers with an inverted duty structure, and businesses that spend on catering, insurance or hotel stays as part of their regular work.

Other changes that may affect your business

E-invoicing for more transactions

The Council recommended extending e-invoicing to domestic purchases from an unregistered person where the buyer pays the tax under reverse charge, and to import of services. This is for taxpayers with an aggregate annual turnover of ₹5 crore and above.

Under reverse charge (RCM), the buyer pays the tax instead of the seller.

An optional ARQP scheme

The Council approved a concept note, in principle, for an optional Annual Return Quarterly Payment (ARQP) scheme. It is meant for taxpayers whose turnover in the previous financial year was up to ₹5 crore and who make only B2C supplies, meaning sales to unregistered persons. As the name suggests, the idea is to file an annual return and pay tax every quarter. The release gives no more detail, so wait for the final scheme.

Time limits in sections 16, 37 and 39

The Council recommended changes in sections 16, 37 and 39 of the CGST Act. These sections deal with ITC, the statement of outward supplies (GSTR-1) and the return. The aim is to line up the time limit for GSTR-1 and the return with the ITC deadline under section 16(4). The release does not give the details.

E-commerce operators: section 9(5)

The Council recommended an amendment in section 9(5) to make clear that an e-commerce operator must pay tax on the notified services, whatever business model it follows.

E-way bills and movement of goods

The Council recommended amendments in sections 68, 129 and 130 of the CGST Act:

• A vehicle carrying goods can be stopped only on specific intelligence, with the approval of an officer not below the rank of Joint Commissioner.
• Inspection, detention or seizure can happen when the supplier or the recipient is located or registered in the state where the vehicle is stopped. There would be no stopping in transit states.
• If no e-way bill has been generated, or the vehicle carries no document showing where the goods come from or go to, the goods can be inspected, detained or seized, whatever the jurisdiction.
• The power of confiscation under section 130 would not apply to goods and vehicles in transit.

In simple words: transporters and traders should face fewer random checks on the road, while goods moving without proper papers can still be stopped.

Exports of services: freelancers, IT and consulting

These recommendations matter to anyone who serves clients outside India.

• Section 2(6)(v) of the IGST Act would be omitted. At present, to count as an export of services, the supplier and the recipient must not be establishments of a distinct person. Removing this condition would help refunds for Indian service providers who supply to or through their own foreign offices or branches.
• Section 13(3)(a) of the IGST Act would be omitted. When the customer makes goods available to the supplier for a service, the place of supply would follow the default rule, which is the location of the recipient. Place of supply decides which country or state the service is treated as supplied in, and therefore which GST applies.
• A new explanation in section 16(1) of the IGST Act: if goods are sold to an overseas buyer but delivered to an SEZ or FTWZ, and payment comes in convertible foreign exchange or in Indian rupees where the RBI permits, the supply is treated as a supply to an SEZ or FTWZ. Manufacturers would get certainty on zero rating.
• A circular would clear the doubts on receiving payment in foreign exchange or Indian rupees for exports of goods and services.

Intellectual property

A transfer of title in intellectual property rights (IPR), whether temporary or permanent, would be treated uniformly as a supply of services. This is an amendment in Schedule II of the CGST Act.

Circulars on specific issues

The Council recommended circulars to clear doubts on:

• The Input Service Distributor (ISD) system for distributing credit on input services.
• ITC for banks, financial institutions and NBFCs that opt for section 17(4).
• Various issues on pre-deposits.
• ITC on demonstration vehicles in certain situations.
• Omission of rule 96(10) from 23 October 2017, in line with a Supreme Court decision.

The Council also approved amendments to the CGST Act and the GSTAT rules, so that the GST Appellate Tribunal (GSTAT) provisions match the Tribunals Reforms Act, 2026 and the related rules.

GST rate and classification clarifications

The Council also cleared doubts about the GST treatment of some goods and services. Most of these are narrow. If you deal in any of them, check the final notification before you act.

Goods

Services

What you should do now

Nothing in this post changes what you must do today. Still, a few habits make sense while we wait for the notifications.

If you run a small business or a shop

• Keep filing returns on or before the due date. The late fee relief is only a recommendation.
• Keep interest and late fee in your budget until the notification arrives.

If you are a trader, manufacturer or exporter

• Check whether your refund falls under zero-rated supplies or inverted duty structure.
• Keep your ITC records of input services and capital goods in order, because the dates 1 November 2026 and 1 April 2027 depend on when the ITC was availed.

If you sell on e-commerce platforms

• Watch for rule 14B. Before you take a separate registration in another state, check whether the new route is available.

If you are a freelancer or run a service business with foreign clients

• Keep your invoices and proof of payment in foreign exchange or Indian rupees. The circular on export payments may affect you.

If you are a student

Follow this meeting as a case study of recommendation, notification, portal update. These sections and rules came up and are worth noting: 16(4), 17(5), 39(1), 54, 69, 73, 74A, 107, 112, 125 and 132 of the CGST Act, and rules 14A, 14B, 19, 60, 61, 86A, 86C and 86D of the CGST Rules.

What not to do

• Do not delay a return thinking the late fee is already waived.
• Do not tell anyone that arrest has been removed from GST. It has only been recommended.
• Do not change the way you file returns today because of the April 2027 proposals.

Terms explained in simple words

Source and disclaimer

Source: the press release on the recommendations of the 57th meeting of the GST Council, posted on 8 October 2026 by PIB Delhi. Read it on the PIB website or the GSTN copy of the release.

Disclaimer: this post is for information only. The Council's recommendations take effect only through notifications, circulars and law amendments, which alone have the force of law. GST rules, limits and dates can change. Please confirm the current position on the official GST portal or with a qualified professional before you act.

Need help with GST?

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