GST Council meeting 2026: What may change as GST 2.0 takes aim at ITC, refunds, arrest powers and other reforms
GST Council Meeting 2026: The GST Council, meeting in New Delhi, is expected to propose significant reforms for tax administration. One reform will address arrest powers for tax officers, requiring court orders for detentions. Input tax credits on certain business expenses may also be unblocked, which could benefit various industries. Small taxpayers may see a simplified registration process and…
The Goods and Services Tax (GST) Council will convene on Thursday to discuss a comprehensive set of reforms, potentially impacting arrest powers, input tax credit (ITC), refunds, and registration procedures. The 57th meeting, chaired by Finance Minister Nirmala Sitharaman, will begin at 11 am at Bharat Mandapam in New Delhi.
Following the September 2025 approval of rate rationalisation, these proposals aim to transition the GST administration from a procedure-driven approach to an automated, data-driven, and risk-based system. According to an earlier report by Economic Times (ET), this shift would allow for a relaxation of some safeguards without compromising enforcement capabilities, thanks to the data now readily available.
Key expectations from the Council meeting include the potential removal of arrest powers under Section 69 of the Central GST Act. The government would still retain the authority to recover tax and impose penalties, while prosecution would be reserved for deliberate evasion or fraud. Up to nine offences could be removed from the current list, with 11 remaining unchanged. The sentence duration for offences could decrease, with the maximum penalty in the middle band potentially reduced from three years to two years.
ITC is expected to be unlocked on several business expenses, including employee insurance, outdoor catering, telecom towers, pipelines, and certain vehicles. Genuine buyers may retain input credit even if a supplier further up the supply chain defaults, provided the defaulting supplier is eventually held accountable. Refunds on input services and plant and machinery may become refundable, potentially turning locked-up working capital into growth capital.
One single application for registration across multiple states and a simplified registration form will be considered, with details carried over between states based on the location entered.
Small taxpayers with an annual turnover of up to Rs 5 crore may file annual returns and pay taxes quarterly, without the issuance of show-cause notices below Rs 10,000. E-commerce small sellers may sell nationwide from a verified address. E-way bill provisions may also be rationalised, while provisions regarding exports of supplies to overseas branches could be altered.
Written by urgent.news from The Economic Times - Economy's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
