08/10/2026
*57th GST Council Meeting Updates!*
The 57th GST Council, chaired by FM Nirmala Sitharaman, wrapped up with sweeping "GST 2.0" reforms focused on decriminalization, unblocking credit & boosting liquidity.
Key highlights as below
1. *Major ITC Unlocked (Section 17(5) Relief):* Full ITC now permitted on employee life & health insurance, telecommunication towers, and pipelines laid outside factories. Unfortunately, decision on the the eagerly awaited ITC for vehicles and motorcars has been deferred to the next GST Council Meeting. (last meeting was held in Sept 2025.)
2. *Inverted Duty Structure Refunds Expanded:* Businesses falling under inverted duty can now claim unutilised ITC refunds on:
• *Input Services* (w.e.f. Nov 1, 2026)
• *Plant & Machinery / Capital Goods* (w.e.f. Apr 1, 2027)
3. *Arrest Powers Scrapped:* Tax officers' arrest powers for regular non-compliance removed; enforcement shifted to civil recovery, interest & penalties.
4. *Prosecution Floor Raised:* Criminal prosecution threshold increased 5x-from *₹1 Crore to ₹5 Crore*.
5. *ITC Shield for Honest Buyers:* Legitimate buyers will no longer lose ITC if an upstream vendor defaults.
6. *No Petty Notices:* Show-Cause Notices (SCNs) will no longer be issued for amounts under *₹10,000*.
7. *Lower General Penalty:* Maximum general penalty slashed from *₹25,000 to ₹10,000*.
8. *Pan-India E-Commerce Relief:* MSMEs selling online can operate inter-state without mandatory physical offices in every state.
9. *Predictable Rates:* Ad-hoc rate changes ended; GST rates will now be reviewed only once a year.
Key Dates:* Inverted duty refund for services from Nov 1, 2026; procedural & capital goods reforms from April 1, 2027.
Regards
CA Abhinav Goyal
