57th GST Council Meeting: Proposed Reforms on Arrest Powers, Input Tax Credit, Refunds and Registration
The 57th meeting of the GST Council was held on 8 October 2026 at Bharat Mandapam, New Delhi. It was first planned for 12 September and then 7 October 2026, and was moved twice.
After the rate overhaul of 2025 (often called "GST 2.0"), the agenda turns to tax administration: how officers enforce the law and how businesses comply with it.
Arrest powers: A key proposal is that GST officers should no longer arrest a person on their own authority. Any arrest would need approval from a court (judicial authorisation).
Prosecution: Reports say the money threshold for starting a criminal case may rise to ₹5 crore of tax evaded, 24 offences may be softened and 9 offences may be removed from the criminal list. Routine disputes over classification, valuation and input tax credit would stay outside criminal law, though tax recovery would continue.
Input tax credit (ITC): Proposals include protecting the credit of genuine buyers when their seller defaults, and allowing credit on GST paid on employee group health and life insurance, which is now blocked.
Refunds and small taxpayers: Proposals include releasing about 90% of eligible refund claims automatically after a risk check, a simpler registration process, and waivers of late fees and lighter penalties for small taxpayers. These are recommendations under discussion; they become law only after changes to the GST Acts, rules or notifications.
The GST Council (Article 279A)
The GST Council is a joint body of the Union Finance Minister and the finance ministers of all states. It recommends the main rules of the Goods and Services Tax: rates, exemptions, and how the tax is run. It was created by the Constitution itself, through Article 279A, added by the 101st Constitutional Amendment Act, 2016. Because both the Centre and the states give up some of their taxing power under GST, the Council is where they decide together.
The 57th meeting shows the Council doing its job of recommending changes to how GST is run, not just its rates. Changes to arrest powers and prosecution need amendments to the CGST Act, so Parliament and the state legislatures will have to pass them after the Council recommends them.
Input Tax Credit (ITC) Mechanism Under GST
Input Tax Credit is the heart of GST. When a business buys inputs, 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 each business adds, and "tax on tax" (cascading) is avoided.
Two ITC proposals before the 57th meeting go straight to these rules. Allowing credit on employee group health and life insurance would loosen a Section 17(5) block, and protecting genuine buyers would address the problem of credit being denied for a seller's default.
GST Act Provisions on Offences and Arrests
The GST law punishes wrongdoing in two ways. The first is money: tax demand, interest and penalty, decided by tax officers. The second is criminal: jail, which only a criminal court can order after a trial (this is called prosecution). Arrest is the step that comes before prosecution in serious cases, and it is the most debated power in GST.
The 57th Council meeting is considering the biggest change yet to these provisions: making a court's approval necessary for any arrest under Section 69, raising the prosecution threshold to ₹5 crore, and taking routine tax disputes out of criminal law. This continues the decriminalisation path seen in the Finance Act, 2023 and the safeguards laid down in Radhika Agarwal.
- 57th GST Council meeting: 8 October 2026, Bharat Mandapam, New Delhi (rescheduled twice, from 12 September and 7 October)
- GST Council: Article 279A, added by the 101st Constitutional Amendment Act, 2016; GST launched 1 July 2017
- Voting: three-fourths of weighted votes; Centre one-third, states two-thirds; quorum one-half
- Mohit Minerals (2022): Council recommendations are persuasive, not binding
- GST 2.0 (56th meeting, 3 September 2025): main slabs 5% and 18%, plus a 40% special rate, from 22 September 2025
- Arrest: Section 69 CGST Act; offences: Section 132; blocked credits: Section 17(5); ITC conditions: Section 16
- Proposed: court approval for arrests; prosecution threshold to ₹5 crore; 24 offences softened, 9 removed
- Proposed: ITC on employee group health and life insurance; about 90% of eligible refunds released automatically after a risk check
- Finance Act, 2023: prosecution threshold raised from ₹1 crore to ₹2 crore (fake invoices excepted)
- Radhika Agarwal v. Union of India (27 February 2025): arrest powers upheld with strict safeguards