The 57th GST Council meeting, chaired by Union Finance Minister Nirmala Sitharaman, has approved a series of procedural and enforcement reforms aimed at changing how businesses handle GST litigation, registration, input tax credit, returns and refunds. With the tax rate structure now settled, the focus is shifting towards simplifying routine compliance and reducing manual intervention in the GST system.

Among the key proposals is a common framework for GST litigation covering the manner in which notices are issued and served, pre-notice communication, allegations of fraud, hearings and the drafting of orders. No notice will be issued for cases involving an amount below ₹10,000. The changes follow discussions between central and state officials over the past year, including three National Coordination Meetings and several meetings of a smaller group of officers.

The Council has also proposed measures to protect genuine buyers claiming input tax credit. A Committee of Officers will examine whether buyers with proper invoices who have received the goods and paid suppliers in full can be protected from losing credit because of issues involving the supplier. The committee is expected to complete its study within three months before placing its recommendations before the next GST Council meeting. Other approved changes will allow input tax credit on health and life insurance taken for employees, as well as on certain telecommunications infrastructure, free samples and stock written off after expiry where destruction is legally required.

Also Read: Cabinet Approves ₹10,000-Crore SME Growth Fund to Boost Manufacturing

The reforms also address taxation of services and refunds. Services bought and resold in the same line of business will be taxed once instead of twice in specified cases, including certain hotel, restaurant, catering and passenger transport services. Businesses facing an inverted tax structure will also be able to include tax paid on input services while claiming refunds from November 1, 2026. Refund treatment for tax paid on plant and machinery will be expanded from April 1, 2027, with the amount calculated at one-sixtieth of the credit for each month.

GST registration and cancellation processes are also set to become more automated. Applications involving changes such as trade names, directors, partners or additional business addresses will be accepted automatically. The closure of GST registrations will be automated in stages, beginning with smaller taxpayers, while the final return will be incorporated into the cancellation application. Registrations suspended or cancelled for missing returns or bank details will also be restored automatically once the required compliance step is completed.

The Council has further proposed changes to reduce notices generated over differences in returns and speed up refunds. The time for acknowledging a refund claim will fall from 15 days to 10 days, with claims treated as acknowledged if neither an acknowledgement nor deficiency memo is issued within that period. The system will sanction 90% of refund claims based on risk assessment, with orders issued within three working days of acknowledgement. Refunds of excess cash ledger balances will also become fully automatic, marking a broader shift towards technology-driven GST administration.

Also Read: AI, Semiconductors and Quantum Tech are India's Next Major Frontier, Says Nirmala Sitharaman