Published 15 October 2026
The 57th meeting of the GST Council, held in New Delhi on 8 October 2026 under the chairpersonship of the Union Finance Minister, with Kerala's Chief Minister among the participants, turned from rates to process. Where the 56th meeting had rationalised rates, this one recommended withdrawing arrest powers altogether, raising the prosecution threshold, ending small-value notices, automating refunds and unblocking input tax credit. Every item is a recommendation: the release itself says the decisions take effect only through circulars, notifications and law amendments, which alone have the force of law. Here is what was recommended, and the dates the Council attached.
Arrest, prosecution and penalties
- Complete withdrawal of arrest powers under GST by omitting section 69 of the CGST Act.
- The monetary threshold for prosecution raised from ₹1 crore to ₹5 crore, with section 132 narrowed: the clause on fraudulent input tax credit would cover only credit taken without receiving goods or services or without an invoice, and the punishments would be rationalised.
- No show cause notice where the tax involved is under ₹10,000, counting CGST, SGST, IGST and cess together, applied also to notices and appeals pending when the rule commences.
- A reduced penalty of 5 per cent in non-fraud cases where tax and interest are paid within 30 days of the order under section 73, or 60 days under section 74A, and removal of the ₹10,000 minimum penalty in non-fraud cases.
- The maximum general penalty under section 125 cut from ₹25,000 to ₹10,000.
- Pre-deposit for appeals against penalty-only orders capped at ₹40 crore, ₹20 crore each under CGST and SGST.
Input tax credit that would open up
Section 17(5), the list of blocked credits, would be amended to remove the restrictions on, among others, outdoor catering, health and life insurance, telecommunication towers, pipelines laid outside the factory, free samples, and goods destroyed or written off on expiry of shelf life as required by law. Refunds under the inverted duty structure would extend to input services, for credit availed on or after 1 November 2026, and refunds on capital goods for zero-rated and inverted-duty cases would be allowed, spread over 60 months, for credit availed on or after 1 April 2027.
Faster, system-based refunds
- Excess balance in the electronic cash ledger refunded automatically, without officer intervention.
- Acknowledgement or deficiency memo within 10 days instead of 15, with deemed acknowledgement if the officer does not act.
- 90 per cent of export and inverted-duty refund claims sanctioned provisionally by the system on risk evaluation, moving later to automatic full sanction for exports.
- Scanned documents dispensed with in the refund form, and the cap on export turnover at 1.5 times the value of like goods supplied domestically removed.
Registration and returns
Amendments to registration particulars, other than the principal place of business, would be accepted automatically on the portal, and fully automatically for those registered through the automatic route of rule 14A. Cancellation on the taxpayer's own application would become automatic, in two phases, once all returns are filed and dues paid. Small sellers on e-commerce platforms could register in other States by declaring the platform's warehouse as their principal place of business, where they pass on input tax credit of no more than ₹2.5 lakh a month. A new mechanism to correct liability and credit mismatches between GSTR-1, GSTR-2B and GSTR-3B would apply from the return for April 2027, after public consultation.
Small businesses and e-way bills
Late fees on delayed returns would be waived for taxpayers with turnover up to ₹5 crore in the preceding year if the return is filed by the end of the month in which it was due. The Council approved in principle a concept note for an optional Annual Return Quarterly Payment scheme for businesses up to ₹5 crore that supply only to unregistered buyers. On the road, a vehicle could be intercepted only on specific intelligence with authorisation from an officer not below Joint Commissioner, only in the State where the supplier or recipient is located, and goods in transit would not be liable to confiscation; a consignment moving without an e-way bill or documents could still be stopped anywhere.
Exports, intellectual property and other items
Services supplied to a foreign office or branch of the same company would no longer be disqualified as exports merely because the two are establishments of a distinct person, and the place-of-supply rule for services on goods made available by a foreign recipient would follow the recipient's location. Transfer of title in intellectual property rights, temporary or permanent, would be treated uniformly as a supply of services. E-invoicing would extend to reverse-charge purchases from unregistered persons and to imports of services for businesses with turnover of ₹5 crore and above. Rate clarifications covered toys, bio-stimulants, used-vehicle margin-scheme credit and plastic and e-waste scrap under reverse charge.
What to do now
Until the amendments are notified the present law applies in full: section 69 remains, the ₹1 crore threshold remains and blocked credits stay blocked. Keep pending appeals and replies on schedule, track input services from 1 November 2026 separately if you are in an inverted-duty sector, and expect the statutory changes to arrive through a CGST amendment and matching State laws, with Kerala's SGST Act following the Centre.
Frequently Asked Questions
Has the GST Council abolished arrests under GST?
It has recommended the complete withdrawal of arrest powers by omitting section 69 of the CGST Act. Until Parliament and the States amend the law, section 69 remains in force.
What is the new GST prosecution threshold?
The Council recommended raising it from ₹1 crore to ₹5 crore and narrowing section 132. The present ₹1 crore threshold applies until the amendment is enacted.
Will GST notices still be issued for small amounts?
The recommendation is that no show cause notice be issued where tax involved is under ₹10,000 across CGST, SGST, IGST and cess, with pending notices and appeals below that amount decided as if the threshold had applied.
Which blocked credits would be opened up?
Among others, outdoor catering, health and life insurance, telecommunication towers, pipelines outside the factory, free samples and goods written off on expiry of shelf life as required by law.
Were GST rates changed at the 57th meeting?
The meeting focused on process. It made clarifications on items such as toys, bio-stimulants and scrap, an optional 5 per cent rate for electric-vehicle passenger transport and a 5 per cent rate for delivery services through e-commerce operators.
Sources
Ministry of Finance, "Recommendations of the 57th Meeting of the GST Council", Press Information Bureau release ID 2320934, 8 October 2026, also published by the GST Council Secretariat; CGST Act, 2017, sections 17(5), 54, 69, 73, 74A, 107, 112, 125 and 132.
BookMyTM handles GST registration, returns, refunds and notice replies for businesses across Kerala, and will update clients as each recommendation is notified.