The 57th GST Council meeting, held in New Delhi on 8 October 2026 under Union Finance Minister Nirmala Sitharaman, recommended process reforms rather than rate cuts: removal of arrest powers (omitting section 69), a prosecution threshold of ₹5 crore, a ₹10,000 minimum for show cause notices, automated refunds and wider input tax credit. These are recommendations. They become law only through amendments, rules, circulars and notifications.
Facts checked: 9 October 2026, against the Ministry of Finance press release posted by PIB Delhi on 8 October 2026 at 7:03 PM (Release ID 2320934), Recommendations of the 57th Meeting of the GST Council, which is also listed on gstcouncil.gov.in. The release states that the recommendations "would be given effect through the relevant circulars/notifications/law amendments which alone shall have the force of law." The 56th meeting section below relies on secondary sources and says so. The Article 279A rules were read in the constitutional amendment gazette.
The headline recommendations
| Area | What the Council recommended |
|---|---|
| Arrest | Complete withdrawal of arrest powers by omitting section 69 of the CGST Act |
| Prosecution | Monetary threshold raised from ₹1 crore to ₹5 crore, with changes to section 132(1) clauses (c), (e), (h) and omission of clause (i) |
| General penalty | Maximum under section 125 reduced from ₹25,000 to ₹10,000 |
| Show cause notices | Minimum tax of ₹10,000 (CGST + SGST + IGST + cess) before a notice can be issued under sections 73, 74 and 74A |
| Penalty relief | 5% penalty in non-fraud cases if tax and interest are paid within 30 days (section 73) or 60 days (section 74A) of the adjudication order; the ₹10,000 minimum penalty removed in non-fraud cases |
| Appeal pre-deposit | Cap of ₹40 crore (₹20 crore CGST and ₹20 crore SGST/UTGST) where an order involves only penalty and no tax demand |
| Late fee | Waiver of late fee under section 39(1) for taxpayers with turnover up to ₹5 crore in the preceding year, if the delayed return is filed by the end of the month in which it was due |
Registration, returns and refunds
Registration. A circular listing the documents needed, drop-down document selection in FORM GST REG-01, and a friendlier portal. Amendments to all registration particulars except the principal place of business would be accepted automatically on the portal (rule 19). Cancellation applications in FORM GST REG-16 would be accepted automatically once pending returns are filed and dues paid, in two phases. A new rule 14B would let small sellers on e-commerce platforms register in other States by declaring the platform's warehouse as their principal place of business, where they intend to pass on ITC of no more than ₹2.5 lakh per month.
Returns. An alternate mechanism to correct liability and ITC in returns, with new electronic statements for reverse charge and for ITC reversed and reclaimed (proposed rules 86D and 86C), and new sub-rules in rule 61 to align GSTR-3B with GSTR-1 and GSTR-2B. The Council recommended that this come into force from the return of April 2027, and that the revised mechanism be put out for public consultation first.
Refunds. System-based processing of refunds under section 54 in two phases. In phase 1, a full refund of excess cash ledger balance is sanctioned automatically, the time for an acknowledgement or deficiency memo drops from 15 to 10 days with deemed acknowledgement, and 90% of zero-rated and inverted duty refund claims is sanctioned provisionally by the system. Phase 2 extends automation to acknowledgement and full sanction for zero-rated claims. The ₹1,000 minimum refund threshold would apply to the total of CGST, SGST/UTGST and IGST taken together.
Input tax credit
| Change | Date mentioned in the release |
|---|---|
| Refund of accumulated ITC on input services in inverted duty cases | ITC availed on or after 1 November 2026 |
| Refund of accumulated ITC on capital goods (zero-rated and inverted duty), spread over 60 months | ITC availed on or after 1 April 2027 |
| Section 17(5): restrictions removed on outdoor catering, health and life insurance, telecommunication towers, pipelines laid outside factory premises, free samples, and goods destroyed or written off on expiry of shelf life as required by law | No date stated |
| Limited ITC in the same line of business for restaurant and outdoor catering, hotel accommodation up to ₹7,500 per unit per day, and gym and fitness services | No date stated |
Exports, e-way bills and other process changes
- Exports of services: omission of section 2(6)(v) of the IGST Act, so a supply to a foreign office of the same legal entity can qualify as an export of services, and a change to the place of supply rule in section 13(3)(a).
- E-way bill interception: goods in a conveyance could be intercepted only on specific intelligence and with authorisation from an officer not below Joint Commissioner, with no interception in transit States, and confiscation under section 130 not applying to goods in transit.
- Rule 86A: a taxpayer could object to blocking of credit and get a personal hearing before the officer decides.
- E-invoicing: extended to domestic supplies received from an unregistered person under reverse charge, and to import of services, for taxpayers with turnover of ₹5 crore and above.
- Annual Return Quarterly Payment (ARQP): an optional scheme approved in principle by concept note for taxpayers with turnover up to ₹5 crore who make only B2C supplies.
- Intellectual property: transfer of title in IPR, temporary or permanent, treated uniformly as a supply of services.
Rates and clarifications
The Council also made targeted rate and classification recommendations. Examples from the release: an option to pay 5% with restricted ITC on passenger transport and vehicle rental using electric vehicles; delivery services through e-commerce operators at 5% without ITC; waste and scrap of plastics, electronics and tyres, and used cooking oil, brought under reverse charge when supplied by an unregistered person, with 2% TDS on business-to-business supplies; nil GST on psyllium seeds; and exemptions for services such as seed storage, coffee curing and certain highway toll concessions. Read the release for the full list and wait for notifications for the exact entries and dates.
The 56th meeting and the 22 September 2025 rate changes
| Item | What was recommended or notified |
|---|---|
| Meeting date | 3 September 2025 |
| Slab structure | 5% merit rate and 18% standard rate, replacing the 12% and 28% slabs for most items |
| Demerit rate | 40% for a limited set of luxury and sin goods |
| Effective date | 22 September 2025, with CBIC notifications issued on 17 September 2025 as reported by secondary sources |
The 57th meeting release refers back to the 56th as the rate rationalisation meeting and to notification 09/2025-CTR dated 17 September 2025. Item-wise rates should be read from the notification. For invoice checks, use the GST calculator and the GST tax invoice format.
How the Council decides
Article 279A of the Constitution, inserted by the Constitution (101st Amendment) Act, sets the rules (gazette text on gstcouncil.gov.in). One-half of the total number of members is the quorum. A decision needs a majority of not less than three-fourths of the weighted votes of the members present and voting. The vote of the Central Government carries a weightage of one-third of the total votes cast, and the votes of all the State Governments taken together carry two-thirds. The Council recommends. It does not legislate, which is why the 57th meeting release says the recommendations take effect only through circulars, notifications and law amendments.
What a CA firm should do now
- Do not apply any recommendation yet. A recommendation is not law. Wait for the law amendment, rule change, circular or notification.
- Diary the dates that are stated. 1 November 2026 and 1 April 2027 for the ITC refund changes, and the April 2027 return for the alternate liability and ITC correction mechanism.
- Brief clients on the notice threshold and the penalty changes once notified, because pending notices under ₹10,000 are to be decided as if the threshold had applied when they were issued.
- Review reverse charge handling for waste and scrap and for e-invoicing of reverse charge supplies, since both would add steps.
- Record which rate and notification applied to each period in the working papers. The GST audit workpapers help.
A worked scenario
As an illustration, a supplier receives a show cause notice under section 73 for ₹8,000 of tax. If the Council's recommendation is legislated as described, no notice would be issued for an amount below ₹10,000, and a pending notice below that figure would be decided as if the threshold had been in force when it was issued. Today, before any amendment, the notice is valid and must be answered. The CA therefore replies on the merits and notes the pending change on the file, instead of treating the notice as already withdrawn.
Frequently asked questions
Has arrest under GST been abolished?
Not yet. The Council recommended omitting section 69 of the CGST Act. Until the amendment is made and brought into force, the existing provision stands.
What is the new prosecution threshold under GST?
The Council recommended raising the monetary threshold for prosecution from ₹1 crore to ₹5 crore, with changes to section 132. It applies only once legislated.
Will small taxpayers get relief on late fees?
The Council recommended waiving the section 39(1) late fee for taxpayers with turnover up to ₹5 crore in the preceding year if the delayed return is filed by the end of the month in which it was due. It needs a notification to take effect.
Is a Council recommendation law?
No. The press release itself says the recommendations take effect through circulars, notifications and law amendments, which alone carry the force of law.
When is the next GST Council meeting?
The 57th meeting release does not give a date for the next meeting. Watch gstcouncil.gov.in and PIB.
For the audit side of these changes, see types of audit in India and the GST return due dates for FY 2026-27.
Statutory facts on this page are checked against their sources, and the page says where it relied on secondary reporting. How we verify · Report an error