57th GST Council Meeting: Input Tax Credit Overhaul, Decriminalisation and Simpler Compliance on the Agenda
The 57th meeting of the GST Council began on 8 October 2026 at Bharat Mandapam, New Delhi. The meeting had been rescheduled more than once before this date.
The agenda is a package of "GST 2.0" reforms focused on ease of doing business: wider input tax credit (ITC) eligibility, protection for genuine buyers when their supplier fails to pay tax, faster refunds, simpler registration and relief for small businesses (MSMEs).
On decriminalisation, the proposals include removing GST officers' power to arrest (under Section 69 of the Central GST Act) and requiring a court's permission for any arrest instead.
Reports say the minimum tax amount for starting criminal prosecution may be raised to ₹5 crore. Of the 24 offences in the law, 9 may be removed fully and 11 kept unchanged. The minimum jail term may be dropped, so that courts can choose a fine instead.
Other proposals include waiving late fees for small taxpayers, easing export rules, letting employers claim ITC on group insurance for employees (now taxed at 18%), and withdrawing the IGST exemption on gold, silver and platinum imported by banks and nominated agencies.
The proposals keep the government's power to recover unpaid tax, interest and penalties. Only the criminal side would be softened.
The GST Council (Article 279A)
The GST Council is a body of the Union Finance Minister and the finance ministers of all states. It recommends the main rules of the Goods and Services Tax: tax rates, which goods and services are taxed or exempt, and the procedures businesses must follow. It was created by the Constitution itself, through Article 279A. It is a key example of "cooperative federalism", where the Centre and states decide tax matters together.
The 57th meeting shows the Council doing its core job: recommending changes to GST law and procedure. Proposals such as removing arrest powers or changing ITC rules will need amendments to the CGST Act by Parliament and to the state GST Acts by state legislatures.
Input Tax Credit (ITC) Mechanism Under GST
Input Tax Credit is the heart of GST. When a business buys raw materials or services, it pays GST on them. When it sells its own product, it subtracts the GST 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 step, and there is no "tax on tax".
Two agenda items target ITC directly. The proposal to protect genuine buyers from supplier defaults relates to the Section 16(2)(c) problem. The proposal to allow ITC on group insurance for employees relates to the blocked credits list in Section 17(5).
GST Act Provisions on Offences and Arrests
The GST law has two kinds of punishment. The first is money punishment: tax demand, interest and penalty, decided by tax officers. The second is criminal punishment: jail, decided only by a criminal court after a trial, which is called prosecution. Jail is meant only for the most serious and deliberate frauds, such as fake invoices or collecting tax and not paying it to the government.
The 57th Council's agenda takes decriminalisation further: removing officers' arrest power under Section 69, raising the prosecution floor to ₹5 crore, removing 9 offences and dropping minimum jail terms. Routine disputes over classification, valuation and ITC would stay outside criminal law, while serious fraud would still be prosecuted.
- Meeting: 57th GST Council meeting, 8 October 2026, Bharat Mandapam, New Delhi
- GST Council: Article 279A, added by the 101st Amendment Act, 2016
- Voting: Centre one-third weight, states two-thirds; decisions need three-fourths of weighted votes
- Arrest power proposed for removal: Section 69, CGST Act; any arrest to need judicial authorisation
- Proposed prosecution threshold: ₹5 crore
- Offences: 24 in total; 9 proposed for removal, 11 unchanged
- Proposed: minimum jail term removed; fine possible in every case; maximum term in the middle band cut from 3 years to 2
- Group insurance for employees: currently 18% GST, ITC blocked under Section 17(5)
- IGST on gold, silver and platinum imports: 3% (exemption for banks and nominated agencies since 2017 proposed for withdrawal)
- Mohit Minerals (2022): Council recommendations persuasive, not binding on legislatures
- Bhandari Scrap Traders (July 2026): Supreme Court upheld Section 16(2)(c)