The 57th GST Council meeting began in New Delhi on Thursday with a broad agenda focused on simplifying compliance, improving tax administration and reducing disputes for businesses and taxpayers. Chaired by Union Finance Minister Nirmala Sitharaman, the meeting is expected to consider changes to GST registration, return filing, input tax credit (ITC), refunds and dispute resolution, along with proposed changes to enforcement powers. Unlike the major rate rationalisation exercise at the 56th meeting in September 2025, the latest discussions are centred largely on improving how the GST system operates.

One of the most closely watched proposals concerns the arrest powers of GST officers and the threshold for criminal prosecution. The Council is considering a proposal that could require judicial authorisation before a taxpayer is arrested, with the aim of distinguishing serious tax evasion from routine compliance disputes. A separate proposal could raise the threshold for launching criminal prosecution from Rs 1 crore to Rs 5 crore and narrow the circumstances in which GST offences can result in criminal proceedings. The proposal has faced opposition from Maharashtra, Gujarat, Uttar Pradesh, Karnataka and Andhra Pradesh, making enforcement powers a potentially contentious issue.

Input tax credit is another major area under consideration, particularly for genuine buyers who lose credit because a supplier fails to deposit tax or comply with filing requirements. Tax experts have suggested a legislative safe harbour or relaxation of credit reversal rules to protect compliant businesses from supplier defaults. Such changes could provide relief to companies facing blocked ITC, which can increase working-capital requirements and lead to prolonged disputes with tax authorities. The Council may also examine wider ITC relief covering areas such as employee group insurance, free samples and goods destroyed after expiry.

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Faster GST refunds are also expected to feature prominently, particularly for exporters and businesses operating under inverted-duty structures. Proposals include automated and faster verification of online refund claims and a more time-bound process, with a maximum timeline of 17 days being considered. A change in the inverted-duty refund formula to include input services could also provide more complete relief. Faster release of accumulated credits could ease working-capital pressure in sectors such as pharmaceuticals and FMCG, where delayed refunds can leave significant amounts of money locked in the tax system.

The Council is also expected to consider measures to simplify GST registration and return filing. Building on the fast-track three-day registration process for low-risk applicants outlined at the previous meeting, the next phase could focus on wider and more standardised implementation. Proposals may include more dynamic return filing, preventive mid-month amendments and auto-populated corrections using e-invoicing data. Biometric Aadhaar authentication for GST registration could also receive attention as authorities seek to make registration easier for genuine businesses while strengthening safeguards against fake registrations and identity theft.

Other proposals could affect India's manufacturing and export ecosystem, including possible export status for certain work performed in India for overseas customers when the finished goods do not leave the country. The measure could benefit contract manufacturers working for foreign companies and support emerging sectors such as semiconductors and electronics. The broader objective of the meeting is to make GST more predictable by reducing unnecessary penalties, simplifying show-cause notice procedures and distinguishing genuine mistakes from deliberate evasion. If approved and implemented effectively, the measures could mark the next phase of GST 2.0, with the emphasis shifting from rate changes to faster refunds, easier compliance, protection of legitimate ITC and fewer tax disputes.

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