57th GST Council Recommendations, 2026: Process Reforms in Registration, Refunds and Dispute Resolution

Policy Update

Aditya Chavan

Background

The Goods and Services Tax (GST) Council, chaired by the Union Finance Minister and made up of finance ministers of the Centre and the states, recommends changes to the tax’s rates, rules and procedures. Its 56th meeting dealt mainly with rates and recommended simplifying the four-tier structure into two main rates of 5 per cent and 18 per cent, with a special rate of 40 per cent for select goods and services (Press Information Bureau, 2026a).

The 57th meeting, held in New Delhi on 8 October 2026 under Finance Minister Nirmala Sitharaman, turned to how the tax is administered. According to the release issued after it, the meeting focused mainly on process reforms, clarifications and compliance simplification (Press Information Bureau, 2026b).

The system these reforms apply to has grown considerably. Registered taxpayers rose from about 60 lakh in 2017 to about 1.70 crore by September 2026. By 30 September 2026 the system had processed 3,053 crore invoice uploads and 833.82 crore e-way bills, and gross GST collections in April–September 2026 were about Rs 12.46 lakh crore, up 11.6 per cent year on year (Press Information Bureau, 2026a). At this scale, the time taken to register, file, claim refunds and resolve disputes affects a large number of firms.

The Council’s decisions are recommendations. They take legal effect only through circulars, notifications and amendments to the law, and the release states that those instruments alone carry the force of law (Press Information Bureau, 2026b). This article reviews the main recommendations, the reasons given for them and the questions they leave open. It does not assess their effect, because none has yet taken effect.

Functioning & Methodology

The Council’s recommendations reach taxpayers in several ways. Some need amendments to the Central GST (CGST) Act or the Integrated GST (IGST) Act, some need changes to the GST Rules, some will be issued as circulars, and others depend on changes to the GST portal (GST Council, 2026; Press Information Bureau, 2026a). The release groups them into three sets: process reforms covering registration, returns, refunds, dispute resolution and the Appellate Tribunal; other reforms covering input tax credit (ITC), exports and ease of doing business; and rate and classification changes (Press Information Bureau, 2026b).

Several reforms rest on automation and are phased. Registration cancellation and refunds each move in two phases. In the first, a limited set of cases is handled automatically, and the second extends automation to all applications once the earlier phase is in place. Automated sanction of refunds depends on a system-based risk assessment (Press Information Bureau, 2026b). The revised returns mechanism will apply from the return for April 2027. It will go to public consultation first, and the Finance Minister is authorised to approve changes in light of feedback (Press Information Bureau, 2026b).

This article draws on the Council’s press release, the Press Information Bureau (PIB) release on the meeting and the PIB document on process reforms. It describes each reform as the documents do, notes where timelines are given and where they are not, and marks its own interpretation as such.

Key Findings

Table 1 summarises the principal process recommendations.

Table 1

Principal Process Recommendations of the 57th GST Council

Source: Compiled by the author from GST Council (2026) and Press Information Bureau (2026a, 2026b).

In registration, amendments to most particulars would be accepted automatically, except a change in the principal place of business. Taxpayers who were registered through the automatic route, which applies where the ITC passed on is up to Rs 2.5 lakh a month, would have all changes accepted automatically (Press Information Bureau, 2026b).

Applications to cancel a registration would be accepted automatically, in the first phase for taxpayers who never passed on ITC above Rs 2.5 lakh in a month or who filed their final return on time, and in the second phase for all applicants. Small sellers on e-commerce platforms who pass on ITC of up to Rs 2.5 lakh a month could register in another state using the operator’s warehouse as their place of business (Press Information Bureau, 2026b).

In refunds, the first phase would refund excess balances in the electronic cash ledger automatically. It would also shorten the period for acknowledging a claim or issuing a deficiency memo from 15 to 10 days, with deemed acknowledgement if none is issued, and provisionally sanction 90 per cent of zero-rated and inverted-duty claims on a risk assessment. The second phase would automate acknowledgement and the full sanction of zero-rated claims. The cap that limited zero-rated turnover to 1.5 times the value of like goods sold domestically would be removed (Press Information Bureau, 2026b).

Figure 1

Selected Thresholds Changed by the 57th GST Council Recommendations

Source: Press Information Bureau (2026b). Each panel has its own scale.

In dispute resolution, no show cause notice would be issued where the tax involved is below Rs 10,000, and pending notices and appeals below that amount would be decided as if the threshold had applied. In non-fraud cases, a taxpayer who pays tax and interest within 30 days of an order under section 73, or 60 days under section 74A, would pay a reduced penalty of 5 per cent, and the Rs 10,000 minimum penalty would be removed (Press Information Bureau, 2026b). The maximum general penalty under section 125 would fall from Rs 25,000 to Rs 10,000. For appeals against penalty-only orders, the pre-deposit would be capped at Rs 40 crore (Press Information Bureau, 2026b).

Among the other reforms, arrest powers under section 69 would be omitted, and the monetary threshold for prosecution would rise from Rs 1 crore to Rs 5 crore. E-way bill interception would require specific intelligence and authorisation from an officer of at least Joint Commissioner rank, and goods could not be intercepted in transit states (Press Information Bureau, 2026b). Taxpayers with turnover of up to Rs 5 crore in the previous year would receive a waiver of the late fee on returns filed by the end of the month in which they fell due. Figure 2 shows the dated measures.

Figure 2

Dated Measures in the 57th GST Council Recommendations

Source: Press Information Bureau (2026a, 2026b). Dates for the phased steps in registration and refunds are not stated.

The rate and classification changes are narrower. They include a nil rate for psyllium seeds, an optional 5 per cent rate with restricted ITC for electric-vehicle passenger transport, and a 5 per cent rate without ITC for delivery services supplied through e-commerce operators (Press Information Bureau, 2026b).

Policy Significance

These recommendations shift GST administration from officer approval towards rule-based and system-based decisions. Automatic acceptance of registration changes, automated refund sanction and the removal of paper documents from zero-rated and inverted-duty claims all reduce the points at which an officer must act (Press Information Bureau, 2026b). The PIB document describes the aim as processes that are simpler, faster and more predictable (Press Information Bureau, 2026a).

The reforms bear most directly on working capital. Refunds of zero-rated and inverted-duty claims, and of ITC on input services and capital goods, return money that firms have already paid (Press Information Bureau, 2026b). For exporters, the removal of the cap on zero-rated turnover, the clarification on payment in foreign exchange or rupees, and the treatment of supplies to overseas buyers in special economic zones bear on how quickly refunds arrive. This links the GST changes to the export-credit measures discussed in earlier articles in this series, since delayed refunds and limited credit both tie up exporters’ funds.

The reforms also change the balance between compliance and enforcement. The omission of arrest powers, the higher prosecution threshold, the Rs 10,000 notice threshold and the reduced penalties lower the consequences of small and non-fraudulent lapses, while system-based cancellation for non-filing and the extension of e-invoicing to more transactions increase automated monitoring (Press Information Bureau, 2026b). The documents present these as measures for ease of doing business, and this article reads them as a shift towards graded enforcement.

Emerging Issues

The first issue is that recommendations are not law. The release states that circulars, notifications and amendments alone carry legal force (Press Information Bureau, 2026b). Several items, including the changes to sections 73, 74, 74A, 69 and 132, need amendments to the Act, and the documents do not give a timetable for them. Until the amendments pass, the reforms remain proposals.

The second issue is phasing. Phase 2 of registration cancellation and of refunds depends on the first phase working and on system-based risk assessment, but the documents give no dates for it and do not describe the risk criteria (Press Information Bureau, 2026a, 2026b). The only fixed dates are 1 November 2026 for refunds of ITC on input services, April 2027 for the returns mechanism and 1 April 2027 for capital-goods ITC refunds.

The third issue is evidence on impact. The documents reviewed describe the reforms and their intended benefits, but they do not give an estimate of the effect on revenue, on refund timelines or on the cost of compliance (GST Council, 2026; Press Information Bureau, 2026a, 2026b). The refund and penalty changes will have fiscal effects for the Centre and the states that the documents do not quantify.

The fourth issue is that some measures add obligations. E-invoicing would extend to purchases on reverse charge from unregistered persons and to imports of services for taxpayers with turnover of Rs 5 crore or more, and system-based cancellation would apply to registrations for non-filing of returns or non-furnishing of bank details (Press Information Bureau, 2026b). The e-way bill changes also restrict interception to the states where the supplier or recipient is located, and the documents do not say how state enforcement agencies are expected to adjust.

Way Forward

The findings point to steps that would help the reforms take effect and be assessed. These are the author’s recommendations drawn from the evidence above.

1. Publish a single implementation schedule. It should list, for each recommendation, whether it needs an Act amendment, a rule change, a circular or a portal change, and the date by which it is expected, so that taxpayers can see which reforms are in force.

2. Set dates and conditions for the second phases. Registration cancellation and refunds each depend on a second phase, and stating when it will start, and what must be achieved in the first phase before it does, would reduce uncertainty.

3. Publish the risk criteria in outline. Provisional sanction of 90 per cent of refund claims depends on system risk assessment, and a short statement of how risk is judged would let taxpayers anticipate outcomes.

4. Report refund timelines regularly. Data on the time taken to acknowledge, sanction and pay refunds, by type of claim, would allow the shift from 15 to 10 days and the automated sanctions to be tested.

5. Estimate the fiscal and compliance effects. A published estimate of the effect on revenue, and of the change in compliance cost for small taxpayers, would help the Centre and the states judge the package.

6. Coordinate with state administrations on enforcement. Clear guidance on e-way bill interception and on how state officers are to act where the supplier or recipient is located in another state would reduce disputes during the transition.

Conclusion

The 57th GST Council meeting concentrated on how the tax is administered. Its recommendations on registration, returns, refunds and dispute resolution replace several officer-led steps with automated ones, shorten refund timelines and lower penalties for small and non-fraudulent lapses (Press Information Bureau, 2026b). They carry weight for a system that now covers about 1.70 crore registered taxpayers (Press Information Bureau, 2026a). Their value depends on matters the documents leave open: the legal amendments that must pass, the dates of the second phases and the effect on revenue and compliance cost. Until those are settled and reported, the reforms are best read as a statement of direction, not a measured change in how GST works.

References

GST Council. (2026, October 8). Recommendations of the 57th meeting of the GST Council [Press release]. Ministry of Finance, Government of India. https://www.gstcouncil.gov.in/sites/default/files/2026-10/press_release.pdf

Press Information Bureau. (2026a, October 9). Next-Gen GST process reforms: Towards simpler, faster and more predictable processes [Backgrounder]. Government of India. https://static.pib.gov.in/WriteReadData/specificdocs/documents/2026/oct/doc_10142_20261009_21430401.pdf

Press Information Bureau. (2026b, October 8). Recommendations of the 57th meeting of the GST Council [Press release]. Ministry of Finance, Government of India. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2320934&reg=48&lang=1

About the Contributor

Aditya Chavan is an Economics undergraduate at Symbiosis School of Economics, Pune, with research interests spanning public policy, MSME development, financial inclusion, and economic governance. His work focuses on analysing government policies and institutional reforms aimed at fostering inclusive and sustainable economic development.

Acknowledgement

The author is grateful to IMPRI – Impact and Policy Research Institute for the opportunity to prepare this policy update, and acknowledges the guidance and feedback received during the review process, which helped strengthen the quality of this article.

Reviewers: Gowri Kudali and Shiva Karthik

Disclaimer

The views expressed in this article are solely those of the author and do not necessarily reflect the views of IMPRI or any affiliated institution.

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