The 57th Goods and Services Tax (GST) Council meeting, scheduled for October 8 at Bharat Mandapam in New Delhi, is set to primarily address significant process reforms. This follows Finance Minister Nirmala Sitharaman's earlier indication that the focus would be on the “process” component of GST 2.0, distinct from the rate rationalization undertaken last year.
Key objectives of the upcoming meeting include simplifying compliance for businesses, broadening access to input tax credit (ITC), and expediting refund processes. While the formal agenda has not been publicly released, sources suggest several critical proposals are on the table.
Key Reforms on the Table
Among the most anticipated discussions is a proposal for a wider mechanism to allow refunds of accumulated input tax credit under inverted-duty structures. This would specifically include credits related to input services and capital goods. The Council may consider separate implementation timelines, with refunds for input services potentially taking effect during the current financial year, and those for capital goods from April 2027.
Another significant reform aims to ease GST registration requirements for small businesses operating through e-commerce platforms. Officials indicate that this process could be substantially simplified, leveraging technology and artificial intelligence to streamline the onboarding of smaller online sellers.
Changes to Legal Framework and Export Services
The Council is also expected to review the criminal provisions within the GST law. A key proposal involves potentially removing the power of GST authorities to arrest taxpayers, while retaining prosecution for cases involving deliberate fraud and serious offenses. Any such legislative amendment would require parliamentary approval.
Furthermore, changes to export-related provisions are under consideration, specifically to clarify ambiguities surrounding services supplied through overseas branches of Indian companies. This move could offer much-needed relief to technology and business-process outsourcing firms currently facing litigation over the tax treatment of such services.
Streamlining Compliance and Rate Stability
The meeting will also examine changes to return filing and other compliance requirements. One proposal suggests an optional annual return mechanism coupled with quarterly tax payments for businesses with a turnover of up to Rs 5 crore that supply unregistered persons.
Officials have indicated that the broader objective of these reforms is to make GST compliance simpler, reduce disputes, and improve the flow of input tax credit and refunds. These changes are expected to be implemented progressively through 2027, rather than all at once.
The focus on process reforms also signals a preference for greater stability in the GST rate structure. Rate reviews are anticipated to occur no more than once a year, with any changes taking effect from April 1. No broad-based rate rationalization is expected at the October 8 meeting. However, the issue of GST on Merchant Discount Rates (MDR) for UPI transactions might be raised for discussion, despite not being part of the formal agenda.