The 57th GST Council meeting is underway in New Delhi with the focus shifting from major rate changes to procedural and compliance reforms. Chaired by Union Finance Minister Nirmala Sitharaman, the meeting is examining proposals involving input tax credit (ITC), faster refunds, GST registration, return filing, penalties, dispute resolution and the arrest powers of GST officers.
The meeting comes more than a year after the major GST rate rationalisation exercise at the 56th GST Council meeting in September 2025.
GST Arrest Powers and Prosecution Threshold
One of the key proposals under discussion is a possible curb on the arrest powers of GST officers.
The Council is considering whether judicial authorisation should be required before certain GST-related arrests. The proposal seeks to distinguish deliberate tax evasion and serious offences from routine compliance disputes.
Another proposal could raise the threshold for initiating criminal prosecution under GST from ₹1 crore to ₹5 crore. The changes are aimed at ensuring serious tax violations continue to face enforcement while reducing the risk of criminal proceedings over comparatively routine compliance issues.
ITC and Faster Refunds in Focus
Input tax credit is another major area of discussion. Businesses and industry representatives have called for clearer and more predictable rules to protect genuine taxpayers from losing eligible ITC because of supplier defaults.
Faster refunds are also being considered as a way to reduce working-capital blockages, particularly for manufacturers and businesses with large supply chains.
Industry representatives have also called for simpler reconciliation mechanisms, clearer documentation requirements and technology-driven compliance systems.
Real Estate Sector Seeks GST Clarity
The real estate sector is seeking greater clarity on ITC, development rights, Floor Space Index and Joint Development Agreements.
Industry representatives said uncertainty around these areas can increase project costs and complicate investment planning. They have also called for simpler refund procedures and clearer treatment of construction-related taxation.
For residential projects, the existing restrictions around ITC can leave taxes on construction inputs embedded in project costs, according to industry representatives.
E-Commerce and MSMEs Could Get Relief
The proposals could also affect small businesses and e-commerce sellers.
One proposal highlighted during the meeting would allow around 9.5 lakh small sellers to register a platform warehouse as their place of business, potentially making national expansion easier without requiring a separate physical presence in every state.
Simplified returns, faster registrations and easier dispute resolution could also reduce compliance costs for MSMEs and digital businesses.
The broader focus of the 57th meeting is therefore on making GST more predictable and easier to comply with, while improving enforcement against deliberate tax evasion.
The final outcome will depend on the Council’s recommendations and subsequent implementation of the proposed changes.
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