At its 57th meeting, convened in New Delhi on 8 October 2026, the GST Council put forward a package of reforms covering the removal of Section 69 from the CGST Act, 2017, along with a ₹5 crore threshold for initiating prosecution, technology-driven processing of refund approvals, and a ₹10,000 floor beneath which show cause notices would not be raised. Rate slabs were left unchanged, with the session devoted to procedural matters — registration, returns, refunds, input tax credit, and adjudication — each outcome carrying the status of a recommendation rather than a binding directive.

Formal instruments — circulars, notifications, and amendments to the law — are the designated vehicles through which those decisions will be put into practice, and only once such instruments are formally issued will they carry binding legal weight; in the meantime, the Act and its accompanying Rules remain operative under their current terms.

Under Rule 14A of the CGST Rules, 2017 — a provision that took shape following deliberations at the 56th Council meeting — a pathway for automatic registration already exists for applicants whose intent does not extend to transferring input tax credit beyond ₹2.5 lakh in any given month. Addressing outstanding applications — where disputes have centred primarily on which documents an officer may request — the Council put forward a proposal for a detailed circular, complete with frequently asked questions, setting out the precise documentation and information that registration requires.

Proposed revisions to GST REG-01 would introduce document-selection drop boxes so that applicants and processing officers draw from an identical reference list, while the portal itself would gain drop-down menus, tool-tips, and context-sensitive guidance tied to each stage of the application. Under the proposed change to Rule 19, every update to registered particulars — apart from those covering the principal place of business — would be processed automatically through the portal.

Under Rule 14A, registrants seeking to update their principal place of business would have those changes processed without manual intervention, while a two-phase overhaul of the Act and associated Rules has been put forward to bring FORM GST REG-16 cancellations into a fully system-driven workflow. Two taxpayer groups fall within the scope of Phase 1: those who have not transferred input tax credit above ₹2.5 lakh in any single month from the date of registration onward, and those who crossed that threshold yet submitted their final return via FORM GSTR-10 within the designated window — both groups subject to the condition that all outstanding returns have been lodged and any amounts owed have been cleared.

Under Phase 2, every cancellation application falls within scope, and the redesigned FORM GST REG-16 incorporates the details previously captured separately in FORM GSTR-10, while a number of the suo motu cancellation grounds listed in Rule 21 are proposed for removal. Under the proposed amendments, Rules 21A and 22 would be updated while a fresh Rule 23A takes shape, establishing automated cancellation where taxpayers have not lodged returns or provided bank account details, alongside an automated reinstatement pathway for those who achieve compliance within the designated timeframe.

Under a proposed regulatory update, vendors supplying goods through e-commerce platforms would fall under a newly introduced provision designated as Rule 14B. Under this arrangement, a vendor lacking any physical presence in a given State or Union Territory may secure registration there by designating the e-commerce operator's warehousing facility within that jurisdiction as its primary place of business. Access to the scheme is restricted to vendors whose intention is to pass through input tax credits not exceeding ₹2.5 lakh in any given month, with transfers of stock between related distinct entities falling outside this threshold calculation; enrolment under the scheme will be processed automatically through the portal, pending conditions that the authorities have yet to formally notify.

Proposed amendments to the return filing process would embed a built-in correction pathway for both liability figures and input tax credit claims, bringing FORM GSTR-3B into alignment with FORM GSTR-1/1A/IFF on the outward supply side and with FORM GSTR-2B on the inward supply side. Upgrades to FORM GSTR-1/1A/IFF are designed to bring reported figures into closer alignment with those in FORM GSTR-3B, with the broader aim of reducing demand notices and automated alerts triggered by data mismatches.

Under the newly inserted Rule 61(1A), taxpayers gain a defined pathway for amending and correcting liability declarations in FORM GSTR-3B, bringing that return into closer alignment with the data already filed through FORM GSTR-1, FORM GSTR-1A, and the Invoice Furnishing Facility. Under the amended framework, Rule 61(1B) establishes a pathway through which taxpayers can correct and adjust input tax credit entries in FORM GSTR-3B so that those figures align with what FORM GSTR-2B reflects, while separately, Rule 60(6A) sets out the operational scope of the Invoice Management System.

Two newly added provisions — Rule 86C and Rule 86D — establish separate electronic statements, one tracking credit reversals and reclaims, the other recording tax settled under the reverse charge mechanism. Under the alternate mechanism, Form GST DRC-03 would carry details of the underlying invoice tied to each payment — an arrangement the Council endorsed for rollout starting with the April 2027 return period. A time-limited public consultation window will open for the updated framework, with authority granted to the Finance Minister to incorporate any adjustments that emerge from the feedback gathered.

Proposed amendments to Sections 16, 37, and 39 of the CGST Act would bring the outward supplies statement and the return filing framework into conformity with the input tax credit deadline established under Section 16(4). Under the ARQP framework — a voluntary mechanism backed by the Council in principle — traders whose combined turnover did not exceed ₹5 crore in the prior financial year and whose dealings run entirely through unregistered buyers would be able to file a single annual return while settling tax dues on a quarterly basis. Details about the application process, timeline, and how to apply had yet to be established, leaving the proposal at an early conceptual stage.

Proposed changes to Section 54 of the CGST Act, along with the accompanying Rules, would establish automated processing and approval for three distinct categories of refund application: surplus balances held in the electronic cash ledger, supplies made under zero-rated arrangements, and claims arising from an inverted duty structure. Under Phase 1 of the rollout, any surplus balance held in the electronic cash ledger will be returned in full through an automated process, with no requirement for officer intervention.

Under the revised procedure, a ten-day window replaces the previous fifteen-day allowance for issuing either an acknowledgement or a deficiency memo, and where neither document is issued within that period, the system automatically registers the acknowledgement on the applicant's behalf. Under the risk-assessment framework built into the tax system, nine-tenths of any refund claim tied to zero-rated supplies or an inverted duty structure will be released to the claimant on a provisional basis without manual intervention.

Under Phase 2 of the framework, full-claim processing for zero-rated supplies would be handled automatically once outstanding dues are offset and a risk assessment is carried out, though the announcement includes no timeline for when either phase takes effect and makes no provision for claims under the inverted duty structure. Designed to accept structured data in a machine-readable format, Form GST RFD-01 removes the requirement to upload scanned documents when filing refund claims under zero-rated supplies or the inverted duty structure.

A planned revision to Rule 89(4)(C) would lift the existing ceiling that ties zero-rated goods exports to no more than 1.5 times the turnover recorded for equivalent domestically supplied goods. Under Section 54(14), a new Explanation will be inserted to clarify that the ₹1,000 floor operates against the combined refund figure drawn from CGST, SGST/UTGST, and IGST rather than against each levy in isolation. Under a proposed restructuring, the interest rate applicable to refunds of pre-deposit amounts lodged when filing appeals would be governed by Section 115 as a self-contained rule, with accompanying guidance to be issued through a circular.

Among the provisions put forward by the Council was a proposal to lift the input tax credit restriction under Section 17(5) of the CGST Act across several categories, covering outdoor catering services, health and life insurance policies, telecommunication tower infrastructure, pipelines situated beyond factory boundaries, complimentary product samples, and goods that are discarded or written off once their legally mandated shelf life has elapsed. Pending amendments to clause (ii) of the proviso under Section 54(3), along with accompanying Rules changes, are set to broaden which input tax credit categories qualify for refund — though the precise boundaries of each relaxation will only become clear once the final amending text is published.

Under the inverted duty structure, input service credits qualifying for ITC from 1 November 2026 onwards will become available for refund claims. Businesses that have accumulated input tax credit on capital goods from 1 April 2027 onwards will be able to claim that credit back under zero-rated supply provisions or an inverted duty structure, with any approved refund amount disbursed in instalments across a five-year window.

Under the proposed amendment to Rule 86A, taxpayers would gain the right to contest any blocked amount in the electronic credit ledger through a formal objection process, including an opportunity to appear in person before the relevant officer reaches a decision. Under the proposed amendments to Sections 73, 74, and 74A of the CGST Act, a show cause notice would not be triggered in cases where the combined tax liability — spanning CGST, SGST, IGST, and Cess — falls below the ₹10,000 threshold. Any notices or appeals unresolved at the point the provision takes effect will be handled under the assumption that the threshold applied from the moment the original notice was issued.

Taxpayers who settle the outstanding amount in full — covering both accrued interest and any applicable penalty — before the deadline treat that penalty as a formal charge under the rules. Where tax and interest obligations are settled within 30 days of an order issued under Section 73 — or within 60 days for orders under Section 74A — a 5% penalty attaches to non-fraud matters. Under the proposed changes, the ₹10,000 floor on penalties in non-fraud matters would be lifted, while the standard penalty ceiling set out in Section 125 would drop from ₹25,000 to ₹10,000.

When the disputed amount consists entirely of a penalty — with no underlying tax demand attached — the advance deposit required to pursue the matter is capped at ₹40 crore in total, split evenly between ₹20 crore under CGST and a matching ₹20 crore under SGST or UTGST. Guidelines covering the quality and punctuality of demand notices, the handling of adjudication and appeal orders, the use of fraud or suppression-of-facts provisions strictly on individual case merits, and adherence to natural justice principles — including the holding of personal hearings — are proposed through a dedicated circular.

Under the CGST Act, an amendment has been put forward that would retroactively legitimise tax notices spanning multiple financial years — notices that various courts had previously struck down as procedurally defective. Dropping arrest authority under the GST framework entirely — achieved by removing Section 69 from the CGST Act — formed the centrepiece of the Council's formal proposal. Amending the statute is the path forward identified by the Council, and until that legislative change takes effect, Section 69 continues to apply — with the prosecution threshold set to rise from ₹1 crore to ₹5 crore once the new provisions come into force.

Proposed amendments to Section 132(1) would remove clause (i) entirely, remove the phrase "evades tax" from clause (e), cut the words "or in any other manner deals with" from clause (h), and narrow clause (c) so that it covers only the fraudulent claiming of input tax credit where goods or services were never actually received, or where no invoice or bill exists. Penalties attached to the range of offences covered under Section 132 are set to be reviewed and brought into closer alignment.

For filers whose aggregate turnover in the preceding year did not exceed ₹5 crore, a remission of the late fee becomes available under Section 39(1) provided the overdue return is submitted before the close of the month in which it originally fell due. The press release contains no reference to interest liability under Section 50 for tax remitted after its due date, with the scope of the recommendation drawn narrowly around late fees alone.

Under the proposed amendments to Sections 68, 129, and 130, any interception of communications would require both a specific intelligence basis and written authorisation from an officer holding at least the rank of Joint Commissioner. Such measures as inspection, detention, or seizure become available only when either the supplying party or the receiving party holds registration or a place of business within the territory carrying out the interception. Goods travelling without a valid e-way bill, or aboard a conveyance carrying no paperwork establishing the origin or destination of those goods, may be stopped, held, or seized by any authority regardless of territorial limits.

Among the rules warranting separate attention, goods and conveyances passing through on a transit basis fall outside Section 130's jurisdiction, three recommendations carry the dates published in the press release, and any refund of accumulated input tax credit tied to input services under an inverted duty arrangement covers only ITC claimed on or after 1 November 2026. A revised process for adjusting liability and input tax credit entries within the return filing system is set to take effect from April 2027, pending the outcome of a public consultation exercise. Refunds tied to accumulated input tax credit on capital goods cover only ITC taken from 1 April 2027 onward, while a start date for the remaining provisions has yet to be set.

Under the proposed expansion, businesses recording an aggregate yearly turnover of ₹5 crore or more would be required to generate e-invoices covering both domestic purchases from unregistered suppliers where reverse-charge liability applies and any inbound services sourced from abroad.