New Delhi: The Goods and Services Tax (GST) Council has approved a wide-ranging package of procedural reforms aimed at making India’s indirect tax system simpler and more predictable for businesses and taxpayers. Union Finance Minister Nirmala Sitharaman announced the decisions after chairing the Council’s 57th meeting in New Delhi on October 8.
The meeting focused on improving the day-to-day functioning of GST, including registration, refunds, input tax credit, litigation and the movement of goods between states. No GST rate changes were announced, with the Council instead prioritising administrative reforms following the previous round of rate rationalisation.
Addressing the media after the meeting, Sitharaman said the latest decisions were centred on process improvements and a trust-based approach to tax administration. She also announced that GST rate changes would be considered once a year, with decisions intended to take effect from April 1, providing businesses with greater predictability in tax planning.
The Finance Minister said the reforms were designed to reduce unnecessary intervention by tax officials, speed up refunds and improve ease of doing business. The recommendations are scheduled to be implemented from April 1, 2027, subject to the required legal and administrative steps.
GST arrest powers to be removed
One of the most significant recommendations is the removal of arrest powers under GST. The threshold for criminal prosecution will be raised from ₹1 crore to ₹5 crore, while minimum punishment provisions will be removed. Courts will have discretion to decide whether a case warrants a fine, imprisonment or both.
The general penalty applicable where no specific penalty is prescribed will also be reduced from ₹25,000 to ₹10,000. The Council has sought to ensure that routine delays and compliance mistakes are dealt with through proportionate measures rather than unnecessarily severe action.
Faster refunds and simpler registration
The Council has recommended reducing the period for acknowledging refund applications from 15 days to 10 days. Sitharaman said 90 per cent of refunds are expected to be issued within three working days, helping businesses access funds more quickly and improve working capital.
Routine changes to GST registration details are also set to become easier through automatic processing. Small sellers operating through e-commerce platforms will benefit from a simplified registration mechanism, allowing them to serve customers across states without having to establish a place of business in every state, subject to the applicable conditions.
Fewer arbitrary checks on goods in transit
The reforms also seek to make the movement of goods across state borders smoother. Inspections, detention and seizure would generally be restricted to authorised officers of the supplier state or destination state. Interception would require specific intelligence and authorisation at the prescribed senior level, reducing arbitrary checks during transportation.
The Council has also recommended common standards for GST notices and proceedings. No notice is proposed where the amount involved is ₹10,000 or less.
Input tax credit and other proposals
The Council discussed concerns involving genuine buyers who may lose input tax credit because of a supplier’s non-compliance. A committee of officers will examine the issue and submit its findings within three months before the matter returns to the Council.
Other measures include widening eligibility for input tax credit and refunds, facilitating exports of services, improving compliance procedures and approving in principle an optional scheme for small consumer-facing businesses with turnover of up to ₹5 crore.
The recommendations mark a shift towards a more technology-driven and taxpayer-friendly GST system, with the government aiming to reduce disputes, improve transparency and make compliance less burdensome.
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