The 57th meeting of the GST Council was held in New Delhi on 8 October 2026. It is the largest set of procedural changes GST has seen in a single sitting — and almost none of it is law yet.
The 57th GST Council meeting recommended removing the power of arrest, raising the prosecution threshold to ₹5 crore, unblocking input tax credit on employee insurance and several other items, faster and partly automatic refunds, and automatic registration amendments. There were no changes to GST rate slabs. Every recommendation takes effect only when CBIC issues the relevant notification, circular or Act amendment, and as at the date of this post none has been issued.
Want to know which of these actually affect your business? WhatsApp us your turnover and sector and we will tell you what to watch for.
Quick Summary
| Area | Recommended change | Status |
| Arrest | Section 69 to be omitted entirely | Needs CGST Act amendment |
| Prosecution | Threshold ₹1 crore → ₹5 crore; Section 132 rationalised | Needs CGST Act amendment |
| General penalty | Section 125 cap ₹25,000 → ₹10,000 | Needs CGST Act amendment |
| Show cause notices | No SCN below ₹10,000 total tax | Needs notification |
| Refunds | Acknowledgement 15 → 10 days; 90% provisional sanction | Phased, needs notification |
| Blocked credits | Section 17(5) relaxed on insurance, catering, towers, pipelines | Needs CGST Act amendment |
| Inverted duty refund | Input services ITC refundable, availed on or after 1 Nov 2026 | Date stated |
| Capital goods refund | Spread over 60 months, availed on or after 1 Apr 2027 | Date stated |
| Registration | Automatic amendments and cancellation; new rule 14B | Needs rule amendment |
| Returns | New liability–ITC alignment mechanism | From April 2027 return |
| Rates | No slab changes; annual rate review going forward | No change |
💡 TaxKitab Tip: Do not change a single process on the strength of this meeting. The Council recommends; CBIC notifies. Between the two there is usually a gap of weeks to months, and the notified text often differs from the press release — dates shift, conditions get added, transitional rules appear that the recommendation never mentioned. What is worth doing today is a short list of which items touch your business, so that when the notification lands you already know what to change.
Nothing Here Is Law Yet
This is the part most coverage of the meeting will skip, so it is worth stating plainly.
The GST Council is a recommendatory body. Its decisions become binding only through a notification under the CGST Act or Rules, a CBIC circular, or an amendment to the Act passed by Parliament and the state legislatures. The PIB release says so directly — the recommendations “would be given effect through the relevant circulars, notifications and law amendments.”
The items needing an Act amendment are the slowest — omitting section 69, changing section 132, reducing the section 125 penalty, relaxing section 17(5) — and realistically move with the next Finance Bill. The items needing only a rule amendment or notification can move within weeks: registration automation, refund timelines, the show-cause notice threshold.
Two dates were stated in the recommendations themselves: 1 November 2026 for inverted-duty refunds on input services, and 1 April 2027 for capital goods refunds. Even these depend on the enabling notification issuing.
Arrest and Prosecution
The Council recommended omitting section 69 of the CGST Act, which currently empowers a Commissioner to authorise arrest for specified offences. If enacted, this removes the power entirely rather than narrowing it.
Alongside it, the prosecution threshold rises from ₹1 crore to ₹5 crore of tax evaded, and section 132 is reworked — clause (i) of 132(1) removed, clause (c) narrowed to fraudulent availment of ITC, and the mandatory minimum punishment dropped. The detail is in what the removal of GST arrest powers means.
Penalties, Notices and Appeals
The general penalty under section 125 falls from ₹25,000 to ₹10,000.
A ₹10,000 minimum threshold applies to show cause notices, measured on CGST plus SGST plus IGST plus cess together. Pending notices below that figure are to be treated as if the threshold had always applied — which, if notified as described, closes a large number of small live disputes.
In non-fraud cases, a 5% reduced penalty applies where tax and interest are paid within 30 days of the order under section 73, or 60 days under section 74A, and the ₹10,000 minimum penalty in non-fraud cases goes. Pre-deposit on penalty-only appeals is capped at ₹40 crore under sections 107(6) and 112(8). A circular is also recommended on the quality of notices and orders, the use of fraud grounds, and observance of natural justice.
Input Tax Credit
This is where the money is for most businesses.
Section 17(5) relaxations. ITC is to be allowed on outdoor catering, health and life insurance for employees, telecom towers, pipelines laid outside factory premises, free samples, and goods destroyed or written off after shelf-life expiry where the law requires destruction. The employee insurance change alone affects nearly every employer, and is set out in ITC on employee health and life insurance.
Inverted duty structure. Accumulated ITC on input services becomes refundable, for credit availed on or after 1 November 2026. Capital goods: the bar on refund of accumulated ITC on capital goods is removed for zero-rated and inverted-duty cases, spread at one-sixtieth per month, for credit availed on or after 1 April 2027.
Supplier default. A Committee of Officers will study protection for a genuine buyer whose supplier has defaulted, reporting within three months. Nothing changes today — the GSTR-2B reconciliation discipline still decides whether your credit survives.
Refunds
Phase 1: automatic sanction of excess electronic cash ledger balances; acknowledgement cut from 15 days to 10, with deemed acknowledgement if neither an acknowledgement nor a deficiency memo issues; and 90% provisional automatic sanction for zero-rated and inverted-duty claims, subject to risk evaluation.
Phase 2: automatic acknowledgement after system verification, and automatic full sanction for zero-rated claims after adjusting dues.
Supporting changes include RFD-01 becoming system-readable, removal of the 1.5x turnover cap in rule 89(4)(C), and the ₹1,000 threshold under section 54(14) applying across all taxes together. Separately, rule 96(10) is to be omitted retrospectively from 23 October 2017, following a Supreme Court decision.
Registration and Returns
Registration amendments — trade name, directors or partners, additional place of business — are to be auto-accepted under an amended rule 19. Cancellation moves to automatic acceptance in two phases, with system-based cancellation and revocation for non-filing or missing bank details, and a new rule 14B gives simplified registration to small e-commerce sellers using an operator’s warehouse.
The three-working-day registration route itself is not new — rule 14A has been live since 1 November 2025. What the 57th Council adds is automation after registration, set out in GST registration amendments and cancellation going automatic.
On returns, an alternate mechanism for amending liability and ITC is proposed from the April 2027 return, with new rules 86C and 86D, changes to rule 61 and DRC-03, and IMS acceptance under rule 60(6A). It goes to public consultation first. An optional Annual Return, Quarterly Payment (ARQP) scheme was also approved in principle for taxpayers with turnover up to ₹5 crore supplying only to unregistered persons, with operational details due at the next meeting.
Rates: No Slab Changes
No GST rate slab was changed. The Council indicated rate rationalisation will be taken up once a year at a dedicated meeting, which ends the quarterly speculation cycle. The slab structure is unchanged and is explained in GST 2.0 and the new rate structure.
There were classification and exemption decisions — sublimation paper, toys, seaweed bio-stimulants, psyllium seeds, re-treaded tractor tyres, RCM on certain waste and scrap with 2% TDS, EV passenger transport at 5% with restricted ITC, 5% without ITC on e-commerce delivery services, and several service exemptions. These are narrow and sector-specific rather than general rate changes.
Frequently Asked Questions
When do these changes come into effect? When CBIC notifies them, not before. Rule and notification changes can come within weeks; anything needing a CGST Act amendment realistically moves with the next Finance Bill.
Can I claim ITC on employee health insurance from now? No. Section 17(5) still blocks it until amended. Claiming early creates a wrong availment with interest and penalty exposure.
Has the arrest power already gone? No. Section 69 remains on the statute book until Parliament and the states amend the Act.
Did GST rates change? No slab changed. Some classification and exemption decisions affect specific goods and services.
My pending notice is under ₹10,000. Is it dropped? Not yet. The recommendation is that pending cases below the threshold be treated as if it applied, but that requires the notification. Keep responding in the meantime.
How do I know when a notification issues? CBIC publishes notifications and circulars on cbic.gov.in. We track them for clients and flag the ones that apply.
References
- PIB, Ministry of Finance — “Recommendations of the 57th Meeting of the GST Council”, Press Release ID 2320934, 8 October 2026
- CGST Act, 2017 — Sections 17(5), 54, 69, 73, 74A, 107, 112, 125, 132
- CGST Rules, 2017 — Rules 14A, 19, 21, 21A, 22, 23A, 61, 86A, 89(4)(C), 96(10)
- GSTN advisory dated 1 November 2025 on the Rule 14A simplified registration scheme
⚠️ Every item above is a Council recommendation, not law. Notified text frequently differs from the press release in conditions and dates. Verify against the actual notification on cbic.gov.in before acting, and treat this post as a tracker rather than an authority.
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