57th GST Council meeting decisions explained: arrest power removed, prosecution threshold raised to ₹5 crore, faster refunds, wider ITC, 3-day registration and relief for small sellers. No rate changes.
The 57th GST Council met in New Delhi on 8 October 2026. It changed no GST rates. Instead it approved process reforms: (1) removal of arrest power and prosecution threshold raised from ₹1 crore to ₹5 crore, (2) general penalty cut from ₹25,000 to ₹10,000 and no notice below ₹10,000, (3) faster refunds with 90% sanctioned within 3 working days, (4) wider input tax credit, and (5) simpler registration plus relief for small sellers and exporters. Most process changes are expected from 1 April 2027.
The 57th meeting of the GST Council was chaired by Union Finance Minister Nirmala Sitharaman. After last year's 56th meeting, which rationalised GST into a two-rate structure, this meeting focused on how GST is administered: notices, refunds, credit, registration and enforcement. The Council also said that rate changes will now be considered only once a year, at a meeting dedicated to rates.
These are Council recommendations, not law yet. Some changes can come through notifications and rules quickly. Others (such as removing arrest power under Section 69) need Parliament to amend the CGST Act and each state to amend its SGST Act. Keep complying with current rules until the changes are notified.
The Council recommended removing the power of GST officers to arrest taxpayers. The monetary threshold for criminal prosecution goes up from ₹1 crore to ₹5 crore of tax evasion. Minimum punishment is removed, so the court decides whether it is a fine, imprisonment or both.
Officers can still investigate evasion, recover tax, charge interest and impose penalties. What changes is that arrest can no longer be used as pressure in a tax dispute.
| Item | Earlier | Recommended |
|---|---|---|
| Power of arrest (Section 69) | Available | Removed |
| Prosecution threshold | ₹1 crore | ₹5 crore |
| Minimum punishment | Prescribed | Removed — left to court |
The general penalty (applied where no specific penalty is prescribed) is reduced from ₹25,000 to ₹10,000. No notice will be issued where the amount involved is below ₹10,000. A taxpayer who files late, makes a mistake or pays late will face recovery, interest and a proportionate penalty — nothing beyond that.
The Council also recommended a common standard for notices: how a notice is issued and served, how a pre-notice intimation is given, when fraud can be alleged, how hearings are held and how orders are written. This should reduce vague or copy-paste notices.
Lower penalties do not mean late filing is free. Late fee and 18% interest on delayed tax still apply. Keep GSTR-1 and GSTR-3B on time.
For manufacturers with an inverted rate structure (inputs taxed higher than outputs), the input-services change is one of the most valuable decisions of this meeting, because credit on services such as job work, freight or professional fees was earlier stuck.
ITC will now be available on items that were blocked or disputed earlier:
A service bought and resold in the same line of business will be taxed once, not twice. ITC will be settled through the Invoice Management System (IMS), so the credit the buyer accepts in IMS is what flows into the return. A Committee of Officers will study, within three months, safeguards for genuine buyers who hold a valid invoice, received the goods and paid the supplier in full but face credit denial because the supplier defaulted.
IMS acceptance will matter even more. Review supplier invoices in IMS every month before filing GSTR-3B — reject or keep pending wrong invoices instead of letting them auto-flow.
Low-risk applicants, and those whose output tax on supplies to registered persons does not exceed ₹2.5 lakh a month, will get registration within three working days without officer intervention. The form will show only fields relevant to the applicant. Routine amendments — trade name, director or partner, additional place of business address — will be accepted automatically.
A small seller can declare an e-commerce operator's warehouse in another state as its principal place of business in that state, with the operator's consent (granted automatically through the system). The seller needs physical presence in at least one state, and that registration is limited to supplies through platforms.
Approved in principle: businesses with turnover up to ₹5 crore that supply only to consumers could file one return a year and pay tax quarterly. The detailed framework will come at the next Council meeting.
| Decision | Expected effective date |
|---|---|
| Inverted refund on input services | Credit availed on or after 1 Nov 2026 |
| Refund on plant & machinery (1/60 per month) | Credit availed on or after 1 Apr 2027 |
| Most process reforms | From 1 Apr 2027 (as stated by the Finance Minister) |
| Arrest removal, prosecution threshold | After CGST and SGST Act amendments |
| Annual-return B2C scheme | Framework at the next Council meeting |
Press Information Bureau release 'Recommendations of the 57th Meeting of the GST Council' (8 October 2026) and the Finance Minister's press briefing as reported the same day. Exact provisions will depend on the notifications and Act amendments that follow; this article will be updated when they are issued.
Senior contributor at Taxpex Consultancy. Reviewed by a practising Chartered Accountant. Published on 9 October 2026 · Updated on 9 October 2026.
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