GST Council's 57th Meeting: Faster Refunds, Lower Penalties and a Higher Bar for Prosecution
The 57th meeting of the GST Council was held on 8 October 2026 in New Delhi. It focused on making GST easier to follow for honest businesses, not on changing tax rates.
Refunds: The time an officer gets to acknowledge a refund claim is to be cut from 15 days to 10 days. If the officer does not respond in time, the claim will be treated as acknowledged ("deemed acknowledgement"). More refunds will be processed by the computer system, with 90% of certain claims (exports and inverted duty cases) paid provisionally after a risk check.
Penalties and prosecution: The money threshold for criminal prosecution is to rise from ₹1 crore to ₹5 crore. The Council also recommended removing the power of GST officers to arrest, so that officers focus on recovering tax while police and other agencies handle criminal cases.
Smaller disputes: No demand notice will be issued where the tax involved is below ₹10,000, and the general penalty is to be cut from ₹25,000 to ₹10,000.
Other changes: Employers can claim input tax credit on GST paid for group insurance cover given to employees, and small sellers on e-commerce platforms get simpler registration. Changes to the inverted duty structure are expected to unlock stuck credits in sectors such as textiles and manufacturing.
No rate changes: The rate structure is treated as settled. Most changes need amendments to the GST laws and will be rolled out in stages from early 2027.
The GST Council (Article 279A)
The GST Council is the joint body of the Union and the states that decides the main rules of GST: rates, exemptions, thresholds and procedures. It was created by the Constitution itself through Article 279A, added by the 101st Constitutional Amendment Act, 2016. Its decisions are formally "recommendations", which Parliament and state legislatures then turn into law.
The 57th meeting shows the Council's second role. After fixing rates in 2025, it is now using its power over procedure to cut compliance costs: faster refunds, fewer small notices and fewer criminal cases.
GST Refund Mechanism (Section 54, CGST Act)
A GST refund is money the government returns to a taxpayer who has paid more tax than was finally due, or who has credit that the law allows to be taken back as cash. Section 54 of the Central Goods and Services Tax (CGST) Act, 2017 sets out who can claim a refund and how. The two biggest refund cases are exports (which are "zero-rated", so no GST should stay inside the price) and the inverted duty structure.
Key Details
- A refund claim must normally be filed within two years from the "relevant date" (for example, the date of export).
- The officer must acknowledge a complete application (currently within 15 days under Rule 90 of the CGST Rules) and pass the final order within 60 days; delay beyond that makes the government pay interest under Section 56.
- Section 54(6) allows a provisional refund of 90% of the claim for zero-rated supplies, paid within 7 days of acknowledgement (Rule 91), with the rest after verification.
- Since late 2025 the same 90% provisional refund has been extended, on a risk-based basis, to inverted duty refunds.
The 57th meeting proposes cutting the acknowledgement window from 15 to 10 days, with deemed acknowledgement if the officer is silent, and wider system-based (automatic) refunds. Faster refunds free up working capital, especially for exporters and small manufacturers.
Inverted Duty Structure Under GST
An inverted duty structure is when the GST a business pays on its inputs is higher than the GST it charges on its finished product. For example, a garment maker may pay 12% or 18% on some fabrics, chemicals or accessories but sell finished garments at 5%. The extra input credit piles up and cannot be used, which blocks the firm's cash.
The Council's changes on inverted duty are expected to unlock credits stuck with businesses in textiles and manufacturing, either by easier refunds or by aligning rates.
GST Act Provisions on Offences and Arrests
GST law punishes wrongdoing in two ways: civil (tax, interest and penalty decided by tax officers) and criminal (prosecution in a court, which can lead to jail). Section 132 of the CGST Act lists offences such as issuing fake invoices or wrongly taking input tax credit, and Section 69 gives certain officers the power to arrest. Because criminal action is serious, the law links it to money thresholds.
The 57th meeting goes further: a ₹5 crore prosecution threshold and an end to arrest powers for GST officers. The aim is "decriminalisation": treating most tax disputes as money matters, while keeping courts for serious fraud.
- 57th GST Council meeting: 8 October 2026, New Delhi; chaired by the Union Finance Minister
- Refund acknowledgement time: proposed cut from 15 days to 10 days, with deemed acknowledgement
- Provisional refund: 90% of certain claims (zero-rated supplies and inverted duty) after a risk check
- Prosecution threshold: proposed rise from ₹1 crore to ₹5 crore
- Arrest power of GST officers: recommended for removal
- No demand notice below ₹10,000 of tax; general penalty cut from ₹25,000 to ₹10,000
- ITC allowed on GST paid for employee insurance cover
- No change in GST rates; law changes to be rolled out in stages from early 2027
- GST Council: Article 279A, 101st Amendment Act, 2016; three-fourths weighted majority (Centre one-third, states two-thirds)