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GST Council Approves Compliance Reforms, Addresses 99% of Issues
India’s GST Council agreed on changes intended to make tax paperwork easier.
It did not change tax rates at this meeting.
The Council expects most tax returns to be handled within 13 days.
It also plans faster steps for acknowledging and paying refunds.
Some registration changes will be handled automatically, and small tax notices below Rs 10,000 will be withdrawn.
From November 2026, some businesses can get refunds for certain tax credits on services.
Officials will study two input tax credit questions before the Council decides on them.
The finance minister also announced a system where some tax assessments can happen without face-to-face meetings.
Experts said the changes could help businesses, while officials will examine concerns about misuse of tax credits.
The GST Council approved measures to ease registration, return filing and refund processes, with no rate changes.
The government expects 90% of returns to be cleared within 13 days; refund acknowledgments are expected within 10 days and 90% of refunds within three days after acknowledgment.
The Council approved automated processes for several registration changes, withdrew notices for amounts below Rs 10,000 and recommended lowering the maximum general penalty to Rs 10,000.
From November 1, 2026, refunds of accumulated input tax credit on input services will be available for inverted duty structure cases.
Officers will review disputed input tax credit proposals, while a faceless assessment scheme for Central GST taxpayers was also announced.
- Who
- The GST Council, chaired by Finance Minister Nirmala Sitharaman, approved the measures.
- What
- It approved GST compliance reforms, including faster refund processes and automated registration changes, without changing tax rates.
- Where
- India.
- When
- At its meeting; the article does not give the meeting date. The input tax credit refund measure starts November 1, 2026.
- Why
- To reduce compliance burdens, improve refunds and make doing business easier.
Support for reforms
Concerns requiring review
Input tax credit for honest taxpayers
Support for reforms
Sitharaman said taxpayers can be unable to claim credit because another party in their supply chain has not paid the tax; a proposal would limit the restriction to the next person in that chain.
Concerns requiring review
Some states raised concerns about the proposal, including the risk of fake invoicing and wrongful input tax credit claims, so the Council deferred a decision for an officers' review.
Business impact of compliance changes
Support for reforms
Industry experts welcomed faster refunds and changes to enforcement, saying they could support working capital, certainty and ease of doing business.
Concerns requiring review
The article reports that states had concerns on two proposals and that officials will assess them before the Council considers a decision; it does not provide a broader opposing assessment of the approved reforms.
Key facts
- Rate changes
- None were approved at this meeting.
- Return processing target
- 90% of returns are expected to be cleared within 13 days of filing.
- Refund processing targets
- Acknowledgment within 10 days; 90% of refunds sanctioned within three days of acknowledgment.
- Small notices
- Notices for amounts below Rs 10,000 will not be sent, and those already sent will be withdrawn.
- Maximum general penalty
- The Council recommended reducing it under Section 125 of the CGST Act from Rs 25,000 to Rs 10,000.
- Input tax credit refund start
- Refund of accumulated input tax credit on input services for inverted duty structure cases begins November 1, 2026.
- Officers' committee
- Its report on two deferred input tax credit matters is expected within three months.
- Proposed implementation
- The reviewed proposals may be considered for implementation from April 1, 2027.
Quotes
Nirmala Sitharaman
India’s finance minister and chair of the GST Council
“Rationalising arrest powers, raising the monetary limit for prosecution and restricting random roadside inspections will bring much-needed certainty for businesses.”
businesstoday.in
“This often creates challenges for honest taxpayers who are unable to claim ITC due to someone else in the supply chain.”
businesstoday.in
Sohrab Bararia
Partner at Grant Thornton
“Faster acknowledgement and sanction of refunds, along with extending inverted duty refunds to ITC accumulated on input services, can provide meaningful relief to taxpayers.”
businesstoday.in
Sources
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