GST Council unveils reforms to ease refunds, registration and reduce litigation

The Goods and Services Tax (GST) Council at its 57th meeting on Thursday (8 October 2026) adopted a series of decisions aimed at improving simplification, increasing certainty in tax treatment, removing delays in processing input tax credits and reducing the compliance burden on businesses, especially smaller ones.

The council met in New Delhi more than a year after its previous meeting in September 2025, during which it rationalized rates on most goods and services and reduced the overall number of tax loopholes under GST.

“I can say that 99% of the issues in GST related to rates and processes are now resolved,” Union Finance Minister and GST Council Chairperson Nirmala Sitharaman said at a press conference after the meeting. “The door is not closed to further reforms and these will be adopted as needed, but most of them are now done.”

“Procedural reforms were guided by the principle of trust,” she added. “Businesses and taxpayers need to be trusted … and we shouldn’t be too pushy.”

Apart from streamlining the processes related to GST registration and availing refunds and input tax credits, the Council has also eased the tax system’s rules on litigation, providing relief to small taxpayers.

Ms Sitharaman said all changes are expected to come into force from 1 April 2027.

She added that no GST rates had been changed during this session and that rate decisions would now only come before the Council once a year and would be implemented from the start of the following financial year.

The finance minister said that over and above the GST Council, the central government has decided to introduce an anonymous assessment system for the central GST system, similar to the one currently in place for income tax. The framework for this will be released for public consultation ahead of Budget 2027 and the system will be implemented in 2027-2028.

Facilitating registration, filing and refunds

The GST Council has approved a system that will provide greater certainty regarding the documents required for registration. According to the government, 61% of taxpayers are allowed to auto-enrol within three working days.

The streamlined system approved by the Council is expected to streamline the process for remaining low-risk taxpayers by avoiding inquiries and rejections.

The new system will also include a simplified registration mechanism for small taxpayers who provide supplies through e-commerce platforms and has also simplified the process of changes and cancellation of registrations. This will now allow these small e-commerce sellers to register in one state instead of every state where they sell goods.

The Center has also shared a concept note with the GST Council and received its in-principle approval for an optional scheme for businesses with a turnover of up to ₹5 crore that supply to consumers, allowing them to file returns once a year instead of quarterly. The final decision on this will be taken in the next GST Council meeting.

Refunds are proposed to be confirmed within 10 days as opposed to the current 15 days. Based on a risk assessment, the government estimates that 90% of claims will be released within three working days of confirmation.

The council recommended allowing input tax credits for additional business expenses, including health and life insurance for employees. Additionally, from November 1, 2026, entry services will also be eligible for refunds under the reverse duty structure.

Reduction in disputes, notices and litigation

The GST Council has announced common standards for notifications and procedures under which no notifications will be sent for tax less than ₹10,000. Furthermore, all pending notices already issued that do not reach this limit will be withdrawn.

A recurring problem among taxpayers is that they are often denied input tax credits because their suppliers have not filed returns even though they themselves have followed all the processes. The GST Council has decided to appoint a committee of its officials to look into the matter. A decision on this is also expected to be taken so that it can be implemented by April 1, 2027.

The Council also said that goods moving between states can be inspected, detained or seized only by an official of the supplying state or the country of destination, and not by any official in between. Further, goods can now be detained only on the basis of “specific intelligence” and only with the permission of the Commissioner-level Joint Commissioner.

“This prevents arbitrary checks by the enforcement wings of GST that affect the movement of goods from one state to another,” Ms. Sitharaman said. “This would greatly improve the ease of movement of goods.”

The council also recommended scrapping powers of arrest under GST and raising the threshold for prosecution from ₹1 crore to ₹5 crore. The general fine will also be reduced from ₹25,000 to ₹10,000.

Simplified standards for the export of services

An Indian firm selling services to a foreign client through its own foreign branch can now enjoy export benefits under the GST system. It is further proposed that testing, repair, certification and research carried out in India for a client abroad be classified as export of services even though the goods remain in the country.

The Board also decided that the date on which the export payment is deemed to be received will be governed by the Reserve Bank of India rules. This will remove uncertainty and enable exporters of services to not only recover the tax paid on the export of services, but also recover the amount more quickly.

Published – 8 Oct 2026 18:14 IST