57th GST Council Meeting: What Was Decided and What It Means for Your Business

Meeting at a glance

The 57th meeting of the GST Council was held on 8 October 2026 in New Delhi, chaired by the Union Finance Minister. The Council made a long list of recommendations covering tax rates, input tax credit (ITC), refunds, registration, returns, penalties and trade facilitation.

One point matters before anything else. These are recommendations. According to the official press release, they take effect only when the government issues the relevant notifications, circulars or law amendments. Many of the bigger changes need amendments to the CGST and IGST Acts, which have to pass through Parliament. As of 13 October 2026, keep following the current rules until each change is notified.

Input tax credit: fewer blocked credits

The Council recommended removing several items from the list of blocked credits under section 17(5). For many businesses this is the most valuable change in the package.

• ITC to be allowed on outdoor catering, health insurance and life insurance
• ITC to be allowed on telecom towers and pipelines laid outside the factory
• ITC to be allowed on free samples, and on goods destroyed or written off because of legal shelf-life expiry
• Restaurants, hotels (rooms up to ₹7,500 per day) and gyms to get limited ITC when used in the same line of business
• Second-hand vehicle dealers under the margin scheme to get ITC on inputs and services other than the vehicles they buy
• Taxpayers whose credit ledger is blocked under rule 86A to get the right to object and a personal hearing

Refunds: faster and more automatic

Refunds are planned in two phases. Exporters and businesses with an inverted duty structure benefit the most.

• Excess balance in the electronic cash ledger to be refunded automatically in full
• Time to acknowledge a refund application cut from 15 to 10 days, with deemed acknowledgement after that
• 90% of zero-rated and inverted duty refunds to be sanctioned provisionally by the system, based on risk checks
• Inverted duty refunds to include ITC on input services availed on or after 1 November 2026
• Refund of ITC on capital goods, availed on or after 1 April 2027, spread over 60 months
• The cap linking zero-rated turnover to 1.5 times the domestic price of like goods to be removed
• No more scanned uploads for zero-rated and inverted duty refund claims

Registration and cancellation made easier

The Council focused on cutting rejections and delays at the GST portal.

• A revised registration form with document drop-downs, and clear FAQs on what to upload
• Most changes to registration details to be accepted automatically, except a change of principal place of business
• Cancellation applications to be accepted automatically where returns are filed, dues are paid and conditions are met
• Small sellers on e-commerce platforms to get a simplified automatic registration, using the platform's warehouse as their place of business

Returns, IMS and reconciliation

A set of changes aims to make GSTR-1, GSTR-3B and GSTR-2B line up, using the Invoice Management System (IMS). Recipients will be able to accept, reject or keep pending the invoices and credit notes they receive, with limits on how long a credit note can stay pending.

New electronic statements are planned for ITC reversed and reclaimed, and for tax paid under reverse charge. Payments made through DRC-03 will need to show the invoices they relate to. The release says this new mechanism may start from the return for April 2027, after a public consultation.

There is also relief on late fees. Taxpayers with turnover of up to ₹5 crore in the previous year will not pay a late fee on GSTR-3B if they file by the end of the month in which the return was due.

Penalties, notices and prosecution

This part of the package is aimed at reducing disputes and fear of harsh action for honest mistakes.

• Power of arrest under section 69 to be withdrawn
• Threshold for prosecution raised from ₹1 crore to ₹5 crore
• No show cause notice where the tax involved is below ₹10,000, including pending notices
• In non-fraud cases, penalty cut to 5% if tax and interest are paid within 30 days (section 73) or 60 days (section 74A) of the order
• Maximum general penalty under section 125 reduced from ₹25,000 to ₹10,000
• Pre-deposit for appeals against penalty-only orders capped at ₹40 crore

Rates, exports and e-commerce

A few rate and supply rules also change, mainly for specific sectors.

• Plastic, e-waste, tyre and used cooking oil scrap: reverse charge when bought from unregistered persons, and 2% TDS on business-to-business supplies
• Delivery services through e-commerce operators: 5% without ITC
• Electric vehicle passenger transport and rental with operator: option of 5% with restricted ITC
• Psyllium seeds (isabgol) at nil rate
• Export of services: the condition about supplies between related establishments to be removed from the IGST Act
• Goods in transit: interception only on specific intelligence and only in the state of the supplier or recipient

What businesses should do now

Do not change your filing or ITC claims yet. Wait for the notification or law amendment for each item. In the meantime, a little preparation helps.

• List the ITC you currently reverse as blocked, such as insurance, catering and free samples, so you know the value at stake
• If you claim inverted duty refunds, track ITC on input services availed from 1 November 2026
• Exporters: keep refund paperwork in order to benefit from the faster refund process
• Start using IMS properly now, because return reconciliation will rely on it
• If you deal in scrap, plan for reverse charge and TDS once notified

How FBS Advisory can help

We will update this article as each change is notified. FBS Advisory reviews GST positions for businesses across India: we work out which recommendations affect you, estimate the ITC or refund at stake, and update your GST settings once the notifications are issued.