MONEY
GST meet scraps arrests, quickens refunds, eases norms and expands ITC relief
- IBJ Bureau
- Oct 09, 2026
The GST Council on Thursday approved the removal of Goods and Services Tax (GST) officers’ powers to arrest individuals under the GST law.
The council raised the prosecution threshold fivefold from Rs 1 crore to Rs 5 crore, while leaving tax rates unchanged at its 57th meeting.
It also approved reducing the general penalty from Rs 25,000 to Rs 10,000, accelerating tax refunds, simplifying registration for small e-commerce sellers and easing compliance requirements for businesses.
Finance Minister Nirmala Sitharaman said that the reforms announced on Thursday would be implemented from April 1, 2027, the beginning of the next financial year.
The council also decided that GST rate-related matters would be considered once a year at a meeting dedicated exclusively to tax rates.
It reduced the time limit for acknowledging refund claims from 15 to 10 days.
Claims will be deemed acknowledged if no acknowledgement or deficiency memo is issued within that period.
Under the new system, 90 per cent of eligible refund claims will be sanctioned automatically following risk assessment, with orders issued within three working days instead of seven.
Refunds of excess balances in electronic cash ledgers will also become fully automatic.
The council approved in principle an optional annual return scheme for businesses with turnover of up to Rs 5 crore that supply exclusively to consumers.
Eligible taxpayers will file returns annually while paying GST quarterly.
Small sellers operating through e-commerce platforms will be allowed to use a platform operator’s warehouse as their principal place of business in another State, subject to conditions, eliminating the need to establish separate physical premises.
The council approved input tax credit (ITC) on health and life insurance purchased by businesses for employees.
Besides, ITC setoff has been provided for telecommunications towers, certain pipelines, free samples and specified expired stock.
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