GST Council's 57th Meeting: Faster Refunds, No Arrest Powers and a Trust-Based Tax System
The GST Council held its 57th meeting on 8 October 2026 at Bharat Mandapam, New Delhi, chaired by the Union Finance Minister. The meeting focused on process reforms (how the tax is run), not on changing tax rates.
Refunds: 90% of refund claims are to be sanctioned within three working days of acknowledgement. The time to acknowledge a claim is cut from 15 days to 10 days, with "deemed acknowledgement" (treated as accepted) if officers do not respond. Registration and most refunds are to be automated.
Inverted duty and capital goods: Refunds under the inverted duty structure will cover input services for credit taken on or after 1 November 2026. Refunds on plant and machinery are allowed for credit taken on or after 1 April 2027, at one-sixtieth of the credit per month.
Trust-based enforcement: Tax officers lose the power to arrest taxpayers, though prosecution (a criminal case in court) stays for real criminal conduct. The money threshold for prosecution is reported as raised five-fold to Rs 5 crore, minimum jail terms are removed, and the general penalty is cut from Rs 25,000 to Rs 10,000.
Fewer notices: No notices will be issued for amounts below Rs 10,000, and pending notices below that amount will be withdrawn. About 12 lakh taxpayers are expected to benefit.
Other decisions: Credit is allowed on items like employee health and life insurance and telecom towers; e-commerce sellers get simpler registration; rate changes will be taken up once a year, effective 1 April. An optional scheme for businesses with turnover up to Rs 5 crore that sell only to consumers (one return a year, tax paid quarterly) was approved in principle, with details to come to the next meeting.
The GST Council (Article 279A)
The GST Council is the body that decides the main rules of the Goods and Services Tax (GST) for the whole country. It brings together the Union Finance Minister and the finance ministers of all states. It was created by the Constitution through Article 279A, added by the 101st Constitutional Amendment Act, 2016. Because the Centre and the states share GST, they decide together in this Council. That is why it is often called an example of cooperative federalism (the Centre and states working together).
The 57th meeting shows the Council using its Article 279A role to change how GST is run: refunds, notices, registration and enforcement. Several changes, such as removing arrest powers or creating a new return scheme, need changes to the GST Acts. So Parliament and the state legislatures will have to pass amendments before they take full effect.
GST Act Provisions on Offences and Arrests
The GST law punishes wrongdoing in two ways. The first is money punishment: tax demand, interest and penalty, decided by tax officers. The second is criminal punishment: jail, which only a criminal court can give after a trial (this is called prosecution). Section 132 of the Central GST (CGST) Act, 2017 lists the offences and jail terms, and Section 69 gives officers the power to arrest a person suspected of serious offences.
The Council has moved GST enforcement away from arrest and jail and towards fines, data checks and fraud detection. This is what "trust-based administration" means: honest taxpayers are not treated as suspects, while real fraud still faces prosecution in court.
Inverted Duty Structure Under GST
An inverted duty structure is when the tax on what a business buys (its inputs) is higher than the tax on what it sells (its output). For example, a business may pay 18% GST on chemicals but charge only 5% GST on the fabric it makes. It keeps collecting less tax than it has already paid, so unused tax credit piles up. The law lets such a business ask for a refund of this extra credit.
Money stuck in unused credit hurts a business's working capital (the cash it needs to run daily operations). By widening refunds to input services and capital goods and making refunds faster, the Council has addressed the very gap the Supreme Court pointed out in the VKC Footsteps case.
Input Tax Credit (ITC) Mechanism Under GST
Input Tax Credit (ITC) is the heart of GST. When a business buys goods or services, it pays GST on them. When it sells its own product, it can subtract the GST already paid on its purchases from the GST it owes on sales. So tax is paid only on the value added at each step, and "tax on tax" (cascading) is avoided.
Buyers have long complained that they lose ITC because of a seller's failure to pay tax, which they cannot control. The Council's moves on Section 16(2)(c) and on blocked credits aim to make ITC fairer and more predictable for honest businesses.
- 57th GST Council meeting: 8 October 2026, Bharat Mandapam, New Delhi (moved from 7 October)
- GST Council: Article 279A, added by the 101st Constitutional Amendment Act, 2016; GST launched 1 July 2017
- Refunds: 90% sanctioned within 3 working days of acknowledgement; acknowledgement period cut from 15 to 10 days, with deemed acknowledgement
- Inverted duty refund on input services: for credit taken on or after 1 November 2026
- Plant and machinery refund: for credit taken on or after 1 April 2027, at 1/60th of credit per month
- No notices below Rs 10,000; about 12 lakh taxpayers to benefit
- General penalty cut from Rs 25,000 to Rs 10,000; officers' arrest power removed; prosecution threshold reported at Rs 5 crore
- Proposed small-business scheme: turnover up to Rs 5 crore, consumer-only sales, one return a year, quarterly tax; of 1.05 crore active taxpayers, 16.85 lakh report only consumer sales
- GST rate changes to be taken up once a year, effective 1 April
- Faceless, centralised CGST administration planned for about 2 lakh multi-jurisdiction taxpayers, rollout in 2027-28
- VKC Footsteps (2021): inverted duty refund limited to input goods; Mohit Minerals (2022): Council recommendations persuasive for legislatures