GST Council Meeting: 91 Proposed Changes to Simplify Rules

The 57th meeting of the Goods and Services Tax (GST) Council was held on 8 October 2026, during which 91 proposed changes to GST rules were discussed. Key recommendations focus on simplifying processes related to registration, refunds, and input tax credits (ITC), while also aiming to reduce litigation. The changes are grouped into 11 themes, as detailed by CA Rajender Arora.

Among the major proposals, the Council recommended implementing automated refunds, expediting acknowledgments, and rationalizing the rules surrounding accumulated credit refunds. The intention is to streamline the GST administration, making it easier for businesses to comply with tax regulations. This meeting marked a shift from previous discussions focused on rate changes to a more comprehensive approach addressing procedural reforms and automation.

The Council aims to minimize the need for direct officer interaction in registration and cancellation processes. Proposed changes include moving towards a more objective and system-driven processing of registration documentation, amendments, and cancellations. The Council’s recommendations also include a significant overhaul of the portal-based return controls, with a revised mechanism expected to be implemented from the April 2027 return period, following stakeholder consultations.

A notable aspect of the meeting was the emphasis on refund automation. Phase I of the proposal outlines an automatic cash-ledger refund process, a deemed acknowledgment, and a provision for 90% provisional refunds. Phase II aims for a complete system sanction of qualifying zero-rated refunds, which are refunds that can be claimed on exports and certain other transactions.

The recommendations address issues related to blocked or non-refundable credits, which can hinder GST neutrality. The Council noted that such credits ultimately increase costs for businesses. Recommendations also included clarifications on goods classifications, reverse charge mechanism (RCM), and exemptions, alongside service recommendations that cover sectors such as electric vehicle transport, e-commerce, hospitality, agriculture, and banking.

Importantly, the proposed changes to ITC for restaurants, caterers, hotels, and gyms will not allow for full ITC. Instead, limited credit will be available for input services within the same line of business, aligning with existing models applicable to passenger transport and vehicle rentals.

While the recommendations propose significant changes, their implementation will depend on subsequent amendments to the Central Goods and Services Tax (CGST) Act and the Integrated Goods and Services Tax (IGST) Act, as well as necessary updates to the CGST Rules and related notifications. The legal effect of these recommendations will follow once the appropriate legislative measures are enacted.

Taxpayers are advised to monitor the final drafting of these recommendations closely, as terminology such as “all dues” and “same line of business” may have broader implications than initially suggested. The Council’s focus on administrative efficiencies rather than merely adjusting tax rates indicates a significant shift in the GST framework that could affect business operations and compliance.

The 57th GST Council meeting may set a precedent for future councils, emphasizing process reform and automation in GST administration. The Council’s recommendations reflect an understanding of how GST impacts businesses beyond mere tax rates, addressing the real-life challenges faced by taxpayers in liquidity management and compliance.