GST Council's 57th Meeting Recommends Arrest Power Removal, Higher Prosecution Threshold and Faster Refunds

Key facts

• The 57th Meeting of the GST Council was held on 8 October 2026 in New Delhi under the chairpersonship of Union Finance & Corporate Affairs Minister Nirmala Sitharaman.
• The GST Council recommended complete withdrawal of arrest powers under GST by omission of section 69 of the CGST Act, 2017, and raising the monetary threshold for prosecution from ₹1 crore to ₹5 crore.
• The Council recommended reducing the maximum general penalty under section 125 of the CGST Act, 2017 from ₹25,000 to ₹10,000, and fixing a minimum threshold of ₹10,000 (CGST + SGST + IGST + Cess) for issuance of show cause notices.
• The Council recommended system-based automated processing of refunds, reducing the time limit for acknowledgement or deficiency memo from 15 days to 10 days, with 90% of claims for zero-rated supplies and inverted duty structure sanctioned provisionally without officer intervention.
• The Council recommended refund of accumulated input tax credit (ITC) on capital goods and input services, with input services refunds available for ITC availed on or after 1 November 2026 and capital goods refunds spread over 60 months for ITC availed on or after 1 April 2027.
• The Council recommended removing restrictions on ITC on outdoor catering, health and life insurance, telecommunication towers, pipelines laid outside factory premises, free samples and goods destroyed on expiry of shelf life.
• The Council recommended simplified GST registration for small sellers on e-commerce platforms via insertion of rule 14B in the CGST Rules, 2017, allowing them to declare an ECO warehouse as their Principal Place of Business in States where they have no physical presence.
• The Council recommended that conveyances carrying goods can be intercepted only on specific intelligence with authorisation of an officer not below the rank of Joint Commissioner, with no interception in transit States.
• The Council approved in-principle an optional Annual Return Quarterly Payment (ARQP) scheme for taxpayers with aggregate turnover up to ₹5 crore engaged exclusively in B2C supplies.
• The Council recommended waiver of late fee on delayed filing of returns under section 39(1) for taxpayers with annual turnover up to ₹5 crore if the return is filed by the end of the month in which it was due.
• The Council recommended measures to facilitate export of services, including omission of the distinct person condition in the IGST Act, 2017, enabling refunds for services supplied to or through foreign offices and branches.
• The Council recommended a 5% GST rate option with restricted ITC on passenger transport and motor vehicle rental services supplied using electric vehicles where battery charging cost is included in the consideration.
• The Council recommended exempting from GST the storage or warehousing of seeds meant for sowing, curing of coffee, services of the Seamen's Provident Fund Organisation, and helicopter passenger transport on seat-sharing basis to or from airports in north-eastern states, Sikkim and Bagdogra.
• The Council recommended bringing delivery services supplied through e-commerce operators under section 9(5) of the CGST Act, 2017 at a GST rate of 5% without ITC, and bringing waste and scrap of plastics, electronics, tyres and used cooking oil under Reverse Charge Mechanism when supplied by unregistered to registered persons.
• The Council noted that 61% of GST registrations already come through the automated route, and that around 95,000 system-generated notices are issued annually over return differences with recovery of only about 0.08% of the amount involved.
• The Council recommended amendments to align GST Appellate Tribunal provisions with the Tribunals Reforms Act, 2026 and the National Tribunals Commission Rules, 2026, and an upper limit of ₹40 crore (₹20 crore CGST and ₹20 crore SGST/UTGST) on pre-deposit for appeals involving only penalty.
• The Council considered extending GST exemptions to medicines for seven additional rare diseases.
• A Committee of Officers will study protection for genuine buyers who hold proper invoices, received goods and paid suppliers in full, within three months, after which an agenda will be placed before the next Council meeting.