57th GST Council meeting was held at Bharat Mandapam in New Delhi. Finance Minister Nirmala Sitharaman chaired this meeting, discussing the policy reforms to resolve GST disputes and improve the flow of input tax credit, with the aim of reducing the time and cost of compliance.
A five-pronged plan was proposed by the government for the next set of reforms to the GST system. The amendments have the purpose of automating and facilitating many of the current administrative bottlenecks in the GST system and lessening the compliance burden, particularly for small businesses.
57th GST Council Meeting Updates
Highlights of the 57th GST Council Meeting chaired by the Union FM Nirmala Sitharaman-
- No notices below ₹10,000: No notice will be issued below the financial limit of Rs 10,000.
- Arrest power removal: It proposes removing the arrest authority under GST and increasing the prosecution limit to Rs 5 crore from Rs 1 crore. The minimum will be eliminated, which leaves sentencing to judicial discretion.
- Reduction in General Penalty: The general penalty, applicable where no specific penalty is prescribed, will be reduced from ₹25,000 to ₹10,000.
- No GST rate revision: In a dedicated meeting, rates will be considered once a year.
- Security for real GST ITC buyers under examination: A committee of officers will investigate safeguards for buyers who have valid invoices, receive goods, and pay suppliers in full. The study is expected to be completed within three months, with an agenda for the next Council meeting.
- Refunds on Input Services Under the Inverted Duty Structure: Refund eligibility will include input services for credits received on or after November 1, 2026.
- Machinery and Plant refunds: Exporters and businesses encountering an inverted duty structure will be eligible for refunds on the plant and machinery credit obtained on or after April 1, 2027. These refunds will be calculated at one-sixtieth of the credit amount for each month.
- Relief for Resale of Services: The proposed changes will address the issue of cascading taxation when services are purchased and then resold within the same business line. This includes specified hotel accommodations, restaurant services, catering, and passenger transport services.
- Broader GST input tax credit: The GST Input Tax Credit (ITC) will now be applicable to employee health and life insurance, telecommunications towers, pipelines outside of factories, free samples, and expired stock that should be legally destroyed.
- Simple GST registration and corrections: Specified registration amendments will be accepted automatically. Corrections to returns for earlier periods and incorrectly entered buyer GSTINs will be allowed, with credits flowing via the Invoice Management System.
- Small B2C businesses: In-principle approval has been granted for an optional scheme for businesses that sell goods only to customers and have a turnover of up to ₹5 crore; this scheme entails quarterly tax payments and the filing of an annual return.
- Extended service export advantages: These changes will encompass qualifying services provided via foreign branches and specific work performed in India on goods belonging to foreign clients, even if the goods remain in India. The method for recognising export payments will be in accordance with RBI regulations.
- Interstate E-commerce registration: Eligible small sellers will be able to declare an e-commerce operator’s warehouse located in another state as their principal place of business, subject to specified conditions.
- Transit checks limited: Only the states of origin and destination will be authorised to inspect the goods in transit. To stop a vehicle en route, there must be concrete information, and prior approval must be obtained from an officer holding at least the rank of Joint Commissioner.
- Faster and automated GST refunds: The acknowledgement time will be reduced from 15 days to 10 days. If no acknowledgement or deficiency memo is issued, a deemed acknowledgement will apply. Risk-assessed GST refunds of 90% will be automatically sanctioned within three working days of acknowledgement. Additionally, refunds for excess cash ledgers will be fully automated.
- Uniform treatment across platforms: Tax treatment will rely on the service actually delivered, ensuring uniformity across distinct e-commerce business models.
- Easy company closure: Cancellation will be automated in phases, and the final return will become part of the closure application. The suspended or cancelled registration for missing returns or bank details will be restored after rectification of the issue.
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