GST Council to Take Up Compliance Reforms: E-Commerce Registration, Credit Protection and Fewer Small Disputes
The GST Council was set to consider a package of process reforms at its meeting on Wednesday, 7 October 2026, as part of the wider "GST 2.0" reform push. A working group of Centre and state GST officers met more than eight times over the past year to prepare the proposals.
E-commerce sellers: small sellers who sell through online platforms could use the platform's warehouse as their registered place of business in states where they have no office. They would need a real, physically verified base with Aadhaar authentication in one state. Registration in other states would need only the platform's consent. About 9.5 lakh small sellers could gain access to a national market this way.
Protecting honest buyers: a buyer who holds a valid invoice would keep their input tax credit even if the seller fails to pay the tax to the government. Recovery would be made from the defaulting seller instead.
Fewer tiny disputes: no notice would be issued for tax demands below ₹10,000. Such cases are about 20% of all cases by number but involve very little money. For bigger demands, officers would first send an intimation and give the taxpayer a chance to respond before a formal notice.
Other proposals: common standards for notices, hearings and reasoned orders; settlement payments to be called "charges" instead of penalties; simpler registration and annual returns; a quarterly payment option for small firms that sell only to consumers; vehicles stopped on the road only with prior approval of a senior officer; a single 5% GST (without input tax credit) on deliveries by e-commerce platforms; and withdrawal of the IGST exemption on gold, silver and platinum imported by banks and agencies.
Tax experts described the package as a shift from controlling revenue through restrictions towards a system built on smooth credit, working-capital relief, certainty for taxpayers and technology-based enforcement.
Input Tax Credit (ITC) Mechanism Under GST
Input Tax Credit (ITC) is the heart of the Goods and Services Tax (GST). When a business buys raw materials or services, it pays GST on them. When it later sells its own product, it can subtract the GST it already paid on its purchases from the GST it owes on its sales. This way, tax is paid only on the value added at each stage, and not again and again on the same amount.
The GST Council's proposal to protect the credit of buyers who hold valid invoices, even when the seller defaults, directly addresses the Section 16(2)(c) problem. It follows the approach of the courts in cases like Suncraft Energy: recover from the defaulting seller first. The proposed 5% rate without ITC for e-commerce deliveries is another example of how ITC choices shape tax design.
The GST Council (Article 279A)
The GST Council is a constitutional body made up of the Union Finance Minister and the finance ministers of all states. It recommends GST rates, exemptions, thresholds and procedures. It was created by Article 279A, inserted by the 101st Constitutional Amendment Act, 2016. Because both the Centre and states tax the same goods and services under GST, the Council is where they decide together.
The compliance package was prepared by a joint Centre-state working group and placed before the Council for decision. If the Council recommends it, the Centre and states will change their GST laws, rules and notifications to put it into effect.
E-Way Bill: How GST Tracks the Movement of Goods
An e-way bill is a digital document created on the government's GST portal before goods worth more than ₹50,000 are moved. It records what is being carried, its value, the sender, the receiver and the vehicle. Tax officers check it on the road to make sure the goods are not moving without paying tax.
The proposed "logistics intelligence checks" would allow vehicles to be stopped only with prior approval of a senior officer, generally by the state where the trip starts. Exceptions apply when documents like the e-way bill are missing. The aim is to cut repeated stops at state borders and make cargo movement faster and more predictable.
- GST Council meeting to consider the reforms: Wednesday, 7 October 2026
- Centre-state officers' working group: met more than 8 times in the past year
- Small e-commerce sellers who could benefit: about 9.5 lakh
- No notice for tax demands below ₹10,000 (about 20% of cases by number)
- Proposed: single 5% GST without ITC on e-commerce platform deliveries
- Proposed: withdrawal of IGST exemption on gold, silver and platinum imports by banks and agencies
- GST Council: Article 279A, 101st Amendment Act, 2016; voting weight Centre 1/3, states 2/3; decisions by 3/4 majority
- E-way bill threshold: goods worth more than ₹50,000