Towards Simpler, Faster And More Predictable Processes
Introduced on 1 July 2017, GST brought many Central and State taxes into a common framework. It marked a milestone in India’s reform journey. It gave effect to the principle of “One Nation, One Tax” and helped move India towards an integrated tax system.
Over the past nine years, standardised procedures and rationalised rates have supported greater transparency, accountability and economic growth. They have also strengthened the vision of ‘Ek Bharat – Shreshtha Bharat’.
Building on this progress, the 56th GST Council recommended Next-Generation reforms to simplify the four-tier GST rate structure. The new structure has two main rates, 5% and 18%, and a special 40% rate for select goods and services.
This reform process has continued at the 57th meeting in October 2026. The Council recommended further process reforms, clarifications on selected goods and services, and measures to facilitate trade and streamline compliance.
GST in Numbers: Wider Reach, Scale and Collections
A wider taxpayer base: Registered taxpayers increased from around 60 lakh in 2017 to ~1.70 crore as of September 2026.
A large-scale digital tax system: As on 30 September 2026, the GST System had cumulatively processed 3,053 crore invoice uploads and 833.82 crore e-way bills.
Strong revenue growth: Gross GST collections reached ~₹12.46 lakh crore during April-September 2026, registering an increase of 11.6% Y-o-Y.
Making GST Registration Simpler, Faster and More Predictable
The proposals of the GST Council seek to create a more predictable and taxpayer-friendly GST registration framework. They are intended to support smoother business operations and encourage wider participation in the formal economy.
Reforms in the Registration process:
The GST Council recommended the following:
Comprehensive and detailed documentation along with FAQs will be issued for processing registration applications.
The registration application will be amended to simplify the filing process and improve clarity for taxpayers and tax officers.
The GST portal will provide a user-friendly interface for filing registration applications, with clear navigational paths, drop-down lists, tool-tips and contextual guidance.
What is Input Tax Credit?
It is the credit a registered person can claim for tax on goods or services received.
For eg: If a manufacturer has paid tax of ₹10,000 on raw material purchase and collected tax of ₹25,000 on product sales. Consequently, the net tax payment amount is ₹15,000 and the manufacturer can claim the tax paid on raw material.
These measures would facilitate correct filing of registration applications and reduce rejections and queries raised in respect of such applications.
Automatic Acceptance
For easy and near real-time updation, the Council suggests automatic acceptance of amendments to registration particulars. This would be enabled on the portal, except for changes relating to the Principal Place of Business (PPoB).
What is Principal Place of Business?
Section 2(89) of the CGST Act, 2017 defines it as follows: “principal place of business” means the place of business specified as the principal place of business in the certificate of registration”.
For taxpayers registered through the automatic route, amendments to all registration particulars, including PPoB, would be accepted automatically.
Registration Cancellation Process
To simplify the registration cancellation process, the Council recommended amendments in the CGST Act, 2017 and the CGST Rules, 2017.
Automatic cancellation: To reduce the officer’s interface the Council proposed the reforms in phased manner.
Phase 1:
The cancellation applications would be accepted automatically after pending returns are filed and all dues are paid. This would apply to taxpayers who have not passed on ITC exceeding ₹2.5 lakh in any month. It would also apply where ITC exceeded ₹2.5 lakh in a month, if the final return is filed within the specified time.
Phase 2:
All the applications for cancellation of registration will be accepted automatically by the system, once all pending returns are filed and all dues are paid. FORM GST REG-16 will be amended so that the details of FORM GSTR-10 can be furnished in the said application itself.
Suo-moto cancellation: To expedite the process of cancellation certain grounds for cancellation of registration by tax officers would be removed, reducing intervention. A system-based mechanism would enable cancellation and revocation based on non-compliance and subsequent compliance, covering defaults relating to non-filing of returns or non-furnishing of bank account details within the specified time.
Reform for E-commerce sellers
The reforms suggested by the GST Council provide a simplified registration mechanism for small taxpayers making supply through E-commerce platforms.
Small sellers passing ITC not more than ₹2.5 lakh/month (excluding stock transfer) can opt for simple registration (PAN based) in States/UTs other than their Home State/UTs. The electronic commerce operator (ECO) warehouse can be declared as the PPoB in a State/UT where there is no physical presence.
This would facilitate ease of doing business for small e-commerce sellers by enabling them to establish their businesses in other States.
GST Return Reforms for Improved Accuracy and Compliance
To reduce mismatches and improve the integrity of ITC across the supply chain, the Council recommended streamlining the return filing process. Following are the proposals of Council:
GSTR-1/1A/IFF would be enhanced to enable better reconciliation with GSTR-3B. A facility “Electronic Statement of tax paid on Reverse charge basis and input tax credit claimed” would facilitate correct reporting of tax liability and ITC on supplies liable to reverse charge. A mechanism would enable reporting/correction of liability in GSTR-3B to align with details reported in GSTR-1/1A/IFF.
GST DRC-03 would be amended to allow declaration of the underlying invoice details for which the payment has been made. The Invoice Management System (IMS) would allow recipients to accept, reject or keep documents pending for ITC reporting. An Electronic Credit Reversal and Reclaim Statement would facilitate correct reporting of ITC reversed and reclaimed. A mechanism would enable reporting/correction of ITC reported in GSTR-3B to align with ITC available in GSTR-2B.
Clarifications would be issued on reporting ITC and its reversal in GSTR-3B in the form of circular. The alternate mechanism for correcting liability and ITC is proposed to apply from the April 2027 return period.
GSTR-1: Form GSTR-1 is a monthly/quarterly Statement of Outward Supplies to be furnished by registered taxpayers making outward supplies of goods and services or both.
GSTR-1A: A taxpayer who needs to amend any supply record furnished in GSTR 1 or need to add any supply record, the same can be done through GSTR 1A.
IFF: Invoice Furnishing Facility (IFF) is an optional facility provided to taxpayers who are in QRMP (Quarterly Return and Monthly Payment) scheme, to file their details of outward supplies in first two months of the quarter (M1 and M2), to pass on the credit to their recipients.
GSTR-3B: It is a simplified summary return. The purpose of the return is for taxpayers to declare their summary GST liabilities, ITC availed etc. for a particular tax period and discharge these liabilities.
GST DRC-03: It is a payment form utilized by taxpayers to make payments towards tax, interest, penalty, fee or any other amount due under the GST Act.
GSTR-2B: GSTR-2B is an auto-drafted ITC statement which is generated for every normal taxpayer on the basis of the information furnished by his suppliers in their respective forms.
Streamlining GST Refunds through Faster, System-Based Processing
The reforms proposed by the GST Council provide for system-based processing and sanctioning of refund claims. This would enable faster processing, greater transparency and reduced manual intervention.
Phase 1:
Refunds of excess cash ledger balances would become automatic, facilitating faster availability of funds for businesses. The acknowledgement period would be reduced from 15 to 10 days. Deemed acknowledgement will apply where no response is issued. Based on risk assessment, 90% of claimed amount is expected to be sanctioned, for refund claims on account of zero-rated supplies and inverted duty structure.
Phase 2:
System-based automated acknowledgment (without officer intervention) on due verification of the refund application by the system for refund claims on account of zero-rated supplies and inverted duty structure. In such acknowledged cases, automated sanction of full refund claim by the system (without officer intervention), in respect of claims pertaining to zero rated supplies only, after adjusting pending dues, if any, on the basis of identification and evaluation of risk by the system.
Measures to Expedite and Streamline Refunds
Amendment in refund application in FORM GST RFD-01. This will capture refund details in a system-readable format in case of refund claims pertaining to zero-rated supply and inverted duty structure.
Amendment in rule 89(4)(C) of the CGST Rules, 2017. This will remove the cap limiting the turnover of zero-rated supply of goods to 1.5 times the value of like goods supplied domestically.
Amendment in section 54(14) of the CGST Act, 2017. The ₹1,000 refund threshold will apply to the total refund amount, including CGST, SGST/UTGST and IGST.
What is zero-rated supply under GST?
This includes exports of goods or services and supplies made to an Special Economic Zone (SEZ) developer or SEZ unit.
Clarity on Interest on Refund of Pre-Deposit
Amendment in section 115 of the CGST Act, 2017. This will make it a standalone provision which will specify the rate of interest applicable to refunds of pre-deposit amounts paid for filing appeals. A circular will also be issued to clarify concerns relating to the rate of interest applicable to such refunds.
Reforms to Simplify Dispute Resolution and Reduce Litigation
The council recommended a circular with the comprehensive guidelines for the tax officers. This circular will include streamlined process of demand notices, adjudication orders and appeal orders. The proposals include the following:
No show cause notices will be issued if the tax amount involved is less than ₹10,000. Pending notices on the date of the provision and appeals involving amounts below ₹10,000, will be decided based on the ₹10,000 minimum threshold.
The penalty will be termed as ‘Charge’ in cases full tax amount is voluntarily paid with interest and penalty, within the specified time limit. A reduced penalty of 5% will apply where tax and interest are discharged within 30 days (under section 73) or 60 days (under Section 74A) of the adjudication order.
The minimum penalty of ₹10,000 to be removed, in non-fraud cases. The maximum general penalty would be reduced from ₹25,000 to ₹10,000. In cases where the order only involves penalty and no demand of tax, an upper limit of ₹40 crore would be provided on account of pre-deposit for appeals.
Other major reforms under GST
Widening Access to ITC Refunds and Claims
Broader refund eligibility
The GST Council recommended changes to the CGST Act and Rules to allow refunds of accumulated ITC in specified cases.
In respect of capital goods, refunds would be eligible for zero-rated supplies and inverted duty structure, applicable on or after 1 April 2027, with refunds spread over 60 months. In respect of input services, refunds would be eligible for inverted duty structure, applicable on or after 1 November 2026. This would ease taxpayers’ working capital constraints and reduce the blockage of ITC on input services and capital goods.
Easing restrictions on blocked ITC
The Council recommended amendments to remove restrictions on claiming ITC for certain supplies, including Outdoor Catering, Health and Life Insurance, Telecommunication Towers, Pipelines outside factory Premises, Free Samples and Goods destroyed or written off after their shelf life expires (as required by law). This would reduce cascading taxes and support a smoother flow of ITC across the supply chain.
Reforms relating to exports/zero-rating of supplies of goods and services
Services supplied through foreign offices or branches: The Council recommended removing the condition that the supplier and recipient must not be establishments of the same person for a service to qualify as an “export of services.” This would facilitate refunds for Indian service providers supplying services to or through their foreign offices or branches.
Payment for exports: A circular shall be issued clarifying that payment for exports of goods and services may be received in foreign exchange or in Indian rupees, where permitted.
Place of supply for certain services: For services where the recipient makes goods physically available to the supplier, the Council recommended determining the place of supply based on the recipient’s location under the default rule in section 13(2).
Goods delivered to overseas buyers in an SEZ or FTWZ: The Council recommended treating goods supplied to overseas buyers but delivered to an SEZ or Free Trade & Warehousing Zone (FTWZ), as zero-rated supplies, when payment is received in convertible foreign exchange or in Indian rupees where permitted by the RBI.
## Ease of living and doing business
Rationalization of provisions relating to arrest and prosecution
The Council recommended withdrawing certain arrest powers under GST. The Council also recommended raising the prosecution threshold from ₹1 crore to ₹5 crore, removing specified offence provisions and wording from section 132(1) of the CGST Act, 2017, and amending clause (c) section 132(1) to cover only offence of fraudulent availment of ITC without receiving the goods or services, or without an invoice or bill.
Rationalising provisions relating to e-way bills
The Council recommended that a conveyance carrying goods could be intercepted only on specific intelligence and with authorisation from an officer of at least Joint Commissioner rank. Inspection and further action could be taken only if the supplier or recipient is located or registered in the State where the interception takes place. Goods could not be intercepted in transit States. If no e-way bill has been generated, or the conveyance carries no document showing the goods’ origin or destination, the goods could be inspected, detained or seized regardless of jurisdiction. Goods/conveyances in transit would not be subject to confiscation under section 130 of the CGST Act.
Treatment of transfer of title in intellectual property rights (IPR)
The Council recommended treating the transfer of IPR title, whether temporary or permanent, uniformly as a supply of services. This would ease GST compliance and support smoother cross-border IPR transactions.
Opportunity to be heard before blocking ITC under Rule 86A
The Council recommended allowing taxpayers to file an objection to amounts blocked in their electronic credit ledger and to attend a personal hearing before the proper officer decides on the objection.
Late-fee relief for small taxpayers
The Council recommended waiving late fees for delayed returns for taxpayers with turnover of up to ₹5 crore in the previous financial year, if the delayed return is filed by the end of the month in which it was due.
Clarification of various issues through circulars
The GST Council recommended issuing circulars to clarify issues including Input Service Distributor (ISD) distribution of input service credit, ITC claims by banks and NBFCs opting for section 17(4), payment of pre-deposits, ITC on demonstration vehicles, and the effective date of omission of rule 96(10).
Introduction of a concept note for an ARQP scheme
The GST Council introduced a concept note for an optional Annual Return Quarterly Payment (ARQP) scheme for taxpayers with aggregate turnover of ₹5 crore or less in the preceding financial year who make supplies exclusively to unregistered persons (B2C supplies).
Streamlining GST compliance
The Council recommended amending section 9(5) of the CGST Act, 2017 so that e-commerce operators are liable to pay tax on notified services, regardless of their business model. It also recommended extending e-invoicing to domestic supplies received from unregistered persons where tax is payable under the reverse charge mechanism, and to imports of services, for taxpayers with aggregate annual turnover of ₹5 crore or more.
Aligning GSTAT provisions with tribunal reforms
The Council approved amendments to the CGST Act, 2017 and the GSTAT Rules, 2023, to align provisions on the GST Appellate Tribunal with the Tribunals Reforms Act, 2026 and the National Tribunals Commission Rules, 2026.
Changes/Clarifications in relation to GST rates on Goods and Services
Recommended GST Treatment for Goods:
In respect of sublimation paper, it was clarified that sublimation paper is classified under heading 4809 and past cases are regularised on an “as is where is” basis. In respect of toys, the notification entries cover all categories of toys under heading 9503 of the Customs Tariff Act. Sea-weed extract-based bio-stimulants registered under Schedule VI to the Fertiliser Order, 1985, are classifiable as fertilisers under heading 3101.
For second-hand vehicles, under the GST margin scheme, suppliers may claim ITC on inputs other than procured second-hand vehicles, and on input services. For specified waste and scrap of plastics, tyres, electrical and electronics, and used cooking oil, Reverse Charge Mechanism (RCM) would apply when an unregistered person supplies such waste to a registered person, with 2% TDS on registered-to-registered supplies. A NIL GST rate has been prescribed for psyllium seeds (Isabgol). The GST rate on re-treaded tractor tyres has been aligned with new tractor tyres. The Compensation Cess not levied by Canteen Stores Department has been exempted for two- and four-wheelers from 01.07.2017 to 30.09.2022, and for aerated drinks from 01.07.2017 to 31.03.2022.
Recommended GST Treatment for Services:
For passenger transport and rental of motor vehicles using electric vehicles (EV), an option has been provided to pay 5% GST with restricted ITC where the cost of battery charging is included in the consideration. Delivery services supplied through an electronic commerce operator (ECO), other than courier or postal, are being brought under Section 9(5) at 5% GST rate without ITC. A 5% GST rate without ITC has been prescribed on delivery services for goods supplied or ordered through an ECO. The exemption available for services of transportation of goods by Goods Transport Agency (GTA) to unregistered persons in relation to goods supplied through an ECO has been denied.
For motor vehicle leasing, statutory and ancillary charges recovered by lessors are incidental to the principal supply of leasing. Input tax credit has been allowed in the same line of business for restaurant, outdoor catering, hotel accommodation up to ₹7,500 per unit per day, and gym or fitness services. Passenger transport by helicopter on seat-sharing basis to or from airports in the North-Eastern States, Sikkim and Bagdogra has been exempted. Storage or warehousing of seeds meant for sowing, curing of coffee, and services of the Seamen’s Provident Fund Organisation have been exempted from GST.
For Research and Development services, a simple mechanism of self-certification by the head of the institution has been introduced. Import of services made without consideration by an Indian establishment of a foreign shipping company from a related person outside India has been exempted. The service of granting a concessionaire the exclusive right to demand, collect and appropriate toll fees for a highway project has been exempted. A special procedure has been provided for valuation and time of payment of GST on O&M services for highway projects under the TOT model. For Fund Transfer Pricing transactions between bank branches, it has been clarified that the notional amount recorded as “interest” is covered by the definition of “interest” in Notification No. 12/2017-CT(Rate).
Conclusion
The 57th GST Council meeting’s recommendations address concerns across registration, returns, refunds, input tax credit and dispute resolution. They also seek to strengthen trade, clarify tax treatment and widen opportunities for small sellers and service exporters.
These recommendations build on GST’s success and mark another step in its continued improvement. Together, these measures would further promote ease of doing business and contribute to a more efficient and taxpayer-friendly GST framework.
