The 57th meeting of the Council, chaired by Finance Minister Nirmala Sitharaman, begins at 11 am at Bharat Mandapam in New Delhi, according to an office memorandum of the GST Council Secretariat.
Also read: GST 2.0: Council to consider sweeping reforms to unlock tax credit, ease compliance
It is the Council’s first meeting since September 2025, when it approved the rate rationalisation that began GST 2.0. The proposals would complete the GST 2.0 makeover, according to an earlier report by ET.
The report said they mark a shift from procedure-heavy compliance towards automated, data-driven and risk-based administration, and that safeguards from the early years of GST can be relaxed without weakening enforcement, because of the data now available.
Key expectations
- Arrest powers: Section 69 of the Central GST Act may be amended to remove arrest powers, with any arrest needing a court order, according to PTI.
- Prosecution: The threshold for criminal proceedings may rise from Rs 1 crore to Rs 5 crore, PTI reported.
- Blocked credit: ITC may open up on employee insurance, outdoor catering, telecom towers, pipelines and certain vehicles, according to an ET report.
- Supplier default: Genuine buyers may keep credit if a supplier further up the chain defaults, according to an ET report.
- Refunds: Tax on input services and on plant and machinery may become refundable, according to an ET report.
- Registration: One application for registration in several states, PTI reported.
- Small taxpayers: Annual returns with quarterly payment, and no notices below Rs 10,000, according to an ET report.
- E-commerce: Small sellers may sell nationwide from one verified address, according to an ET report.
- E-way bills: Provisions on e-way bill requirements may be rationalised, according to an ET report.
- Exports: Supplies to overseas branches may count as exports, according to an ET report.
Arrest powers and prosecutionSection 69 of the Central GST Act currently lets the Commissioner authorise an officer to arrest a person where there is reason to believe specified offences have been committed, according to an ET report. It has been reported that the coming reform may remove this power and require a court order for any arrest.
The government would retain its powers to recover tax and impose penalties, while prosecution would stay for deliberate evasion or fraud. Of the 24 offences covered, nine could be removed and 11 left unchanged. The minimum sentence could go, and the maximum in the middle band could be cut from three years to two. Routine disputes over classification, valuation and ITC would be kept out of prosecution, according to a PTI report.
PTI quoted Rajat Mohan of AMRG Global as saying that with arrest removed and prosecution reserved for serious cases, the focus shifts to using GSTN’s data capabilities to detect fraud. It was also reported that amendments to the GST law would be needed to give effect to any change approved by the Council.
Input tax credit
The Council is expected to relax Section 17(5), which blocks credit on certain expenses. An ET report said the list could include health and life insurance for employees, outdoor catering, telecom towers, pipelines outside factories, certain free samples, expired goods requiring destruction, vehicles seating up to 13 persons with their insurance and maintenance, and leasing or hiring of vehicles.
The report said credit on telecom towers and pipelines would address significant capital expenditure in the telecom, refining, petrochemical, fertiliser, gas distribution and infrastructure sectors.
A separate proposal would let a genuine buyer keep credit when a supplier further up the chain fails to pay tax, with recovery directed at the defaulting supplier, according to an ET report. The report said this is possible because seller and buyer data is now linked invoice by invoice, and called the issue one of the largest causes of GST litigation.
Bipin Sapra, partner at EY, said, as quoted by ET, that unlocking blocked credit can lower costs across industry and make Indian goods and services more competitive.
Refunds
Tax paid on plant and machinery and on input services may be refunded in monthly installments over five years, as businesses could not recover this under ITC, according to an ET report. The report said many goods in the 5% bracket, including food, pharma, textiles and electric vehicles, face an inverted duty structure, with ITC accumulation running into thousands of crores.
ANI reported that exporters claiming duty drawbacks could also be covered. Data held by customs and the Reserve Bank’s export monitoring system would feed into refunds directly, the ET report said. Sapra said, as quoted by ET, that the move could turn locked-up working capital into growth capital.
Registration
PTI reported that the Council is likely to consider a single application for registration in several states, with a simpler form for large businesses and uniform document guidelines for officers. Details would carry over between states, and the system would decide jurisdiction from the location entered, sources told PTI.
A simplified route introduced from November 1, 2025 grants registration in three days and covers 61% of the 1.68 crore registrations, according to PTI. Changes in company name, directors or partners and additional place of business, about 10.5 lakh of 16 lakh amendment applications a year, would be approved automatically. Mohan said that state-wise registrations will continue, PTI reported.
Small taxpayers and e-commerce
Businesses with turnover up to Rs 5 crore selling only to unregistered customers may file annual returns and pay tax quarterly, according to an ET report. The report said no show-cause notice may be issued below Rs 10,000, including in pending cases. About 95,000 notices a year arise from return mismatches, with recovery of only 0.08%, the report said.
ANI reported that a late fee waiver for delayed returns could also come.
Also read: Next-gen GST: Taking India’s reform journey forward
Small e-commerce sellers may sell nationwide from one registered address, using platform warehouses as places of business elsewhere, according to another ET report. They would need a physical presence in only one state, with Aadhaar authentication, the report said. It added that the Council will also settle who pays GST on services such as cab bookings, and that delivery of goods ordered on platforms would attract 5% without credit.
Exports
Supplies to overseas branch offices may be treated as exports and eligible for ITC, according to an ET report. The report said goods sold to foreign buyers but delivered in a special economic zone could also count as exports if payment is in foreign currency, and that GST norms may be aligned with the Reserve Bank’s rules on export payments. This could offer relief to the IT and IT-enabled services sectors, the report said.