09/10/2026
GST Council clears major reforms:
1️⃣ GST ARREST POWERS TO GO
The Council has cleared a major change aimed at removing GST officers’ arrest powers under the existing framework. Serious offences may still attract prosecution, subject to the revised legal framework.
2️⃣ PROSECUTION THRESHOLD RAISED TO ₹5 CRORE
The threshold for prosecution is set to increase from ₹1 crore to ₹5 crore. The minimum punishment is also proposed to be removed, giving courts greater discretion over punishment.
3️⃣ GST REFUNDS TO BECOME FASTER
Eligible refund claims will benefit from a more automated process:
* Refund acknowledgement period reduced from 15 days to 10 days.
* If neither acknowledgement nor a deficiency memo is issued within the prescribed period, the claim will be treated as acknowledged.
Simple tax
* 90% of eligible claims may be sanctioned through risk-based system processing.
* Refund orders are expected within 3 working days of acknowledgement.
* Excess cash-ledger balances will be refunded automatically.
4️⃣ EASIER GST REGISTRATION
Routine amendments, including changes in trade name, directors/partners and additional places of business, are set to become more automated, reducing the need for officer intervention.
Simple tax
5️⃣ MORE INPUT TAX CREDIT RELIEF
The reforms expand ITC availability in specified areas, including employee health and life insurance, telecommunications towers and pipelines outside factories, and certain free samples and expired stock destroyed as required by law.
6️⃣ RELIEF UNDER INVERTED DUTY STRUCTURE
Refunds are set to expand to eligible input services from 1 November 2026. A separate mechanism for plant and machinery credit is scheduled for eligible credit availed from 1 April 2027.
7️⃣ FEWER PHYSICAL CHECKS ON GOODS IN TRANSIT
Physical inspection is proposed to be restricted to cases supported by specific intelligence and prior authorisation. The framework will limit inspections by states along the route.
8️⃣ ANNUAL GST RETURN OPTION FOR SOME SMALL TAXPAYERS
An optional annual-return scheme has been approved in principle for eligible taxpayers with turnover up to ₹5 crore who supply only to consumers, with tax payments quarterly. Detailed rules and legal amendments are still to follow.
9️⃣ GENERAL PENALTY REDUCED
The general penalty applicable where no specific penalty is prescribed is set to reduce from ₹25,000 to ₹10,000.
📌 IMPORTANT: Some measures require statutory amendments, notifications or detailed implementation rules. The applicable effective dates and final legal text must be checked before acting on these changes.
THE BIG PICTURE
The GST Council is moving towards a more technology-driven, automated and trust-based compliance system, with less routine physical intervention and a stronger focus on risk-based enforcement.
For businesses, the real test will be how quickly these reforms translate into practical relief.
