GST Council adopts sweeping reforms to ease compliance and speed refunds for businesses

During its 57th session, the GST Council enacted several reforms aimed at reducing compliance burdens and improving cash flow for businesses. Key changes include the removal of arrest powers from GST tax officers and a five-fold increase in the prosecution threshold, now set at Rs 5 crore. The Council also lowered the minimum notice amount to Rs 10,000 and cut the standard penalty to the same figure.

A voluntary scheme lets eligible small enterprises (turnover up to Rs 5 crore) file one annual return while paying tax quarterly. Exporters will see refunds processed faster, with 90% of claimed amounts sanctioned within three working days and eligibility extended to input services after November 1 2026. The reforms broaden input-tax credit to expenses such as employee insurance, telecom towers and destroyed stock, and they simplify e-commerce sellers' ability to operate across states. GST rates remain unchanged, but the overall package is expected to lower costs for manufacturers, exporters, hospitality and logistics firms, with possible indirect benefits for consumers.