57th GST Council Meeting Recommendations Explained (8 October 2026)

Written by Nihal Srivastava, Krystal7 Consultants. Last updated 13 October 2026.

The 57th GST Council meeting on 8 Oct 2026 recommended withdrawing GST arrest powers by omitting section 69 of the CGST Act. It recommended a prosecution threshold of Rs 5 crore (from Rs 1 crore) and a general penalty of Rs 10,000 (from Rs 25,000). It also recommended system based refunds, refunds of credit on input services and capital goods, and fewer blocked credits under section 17(5). Services supplied to your own foreign branches can become exports. These are recommendations. Most need an amendment to the CGST Act or IGST Act before they apply.

This page sets out each recommendation in the Council's release, the law it changes and the dates the Council gave. It also says what a foreign owned company, an Indian branch or an exporter should do now.

What did the 57th GST Council meeting recommend?

The Council met in New Delhi on 8 Oct 2026, chaired by the Union Finance Minister. The 56th meeting in 2025 cut and merged rates. The 57th meeting dealt with process: registration, returns, refunds and adjudication, plus trade facilitation and some rate clarifications. The Ministry of Finance published the decisions through PIB on 8 Oct 2026 at 7:03 PM.

The release groups the decisions under three heads. Head A covers process reforms. Head B covers input tax credit (ITC), exports and ease of doing business. Head C covers rates and classification for goods and services.

Area	Main recommendation	Number in the release
Arrest	Withdraw arrest powers by omitting section 69 of the CGST Act	Section 69 omitted
Prosecution	Raise the monetary threshold for prosecution	Rs 1 crore to Rs 5 crore
General penalty	Cut the maximum penalty under section 125	Rs 25,000 to Rs 10,000
Show cause notices	No notice where the tax involved is small	Below Rs 10,000 (CGST, SGST, IGST and cess together)
Refunds	System based sanction, 90 percent provisional refund on risk evaluation	Acknowledgement time cut to 10 days (from 15)
ITC refund	Refund of credit on input services (inverted duty) and capital goods	Input services from 1 Nov 2026; capital goods from 1 Apr 2027 over 60 months
Blocked credit	Remove several items from section 17(5)	Includes health and life insurance, outdoor catering, free samples
Export of services	Remove the distinct person condition in section 2(6)(v) of the IGST Act	Section 2(6)(v) omitted
Late fee	Waive late fee for small taxpayers who file within the month	Turnover up to Rs 5 crore
Small B2C businesses	In principle approval for an optional Annual Return Quarterly Payment scheme	Turnover up to Rs 5 crore
Appeals	Cap pre deposit where only a penalty is in dispute	Rs 40 crore (Rs 20 crore CGST and Rs 20 crore SGST or UTGST)

When do the 57th GST Council recommendations take effect?

None of the recommendations is law yet. The release says they take effect only through circulars, notifications and law amendments, which "alone shall have the force of law". The route depends on what is being changed.

A change to the CGST Act or the IGST Act needs Parliament. The States then mirror it in their SGST Acts. A change to the CGST Rules, a rate notification or a circular can be issued by notification, which is usually quicker. The release names the instrument for most items, and the table below follows that wording.

Change	Instrument named in the release	What that means for timing
Omit section 69 (arrest) and amend section 132 (prosecution)	CGST Act amendment	Waits for Parliament. Until then, section 69 stays in force
Section 125 general penalty, show cause notice threshold, 5 percent penalty	CGST Act amendment (sections 73, 74, 74A, 125)	Waits for Parliament
Pre deposit cap for penalty only appeals	CGST Act amendment (sections 107(6) and 112(8))	Waits for Parliament
Refund automation and ITC refund on input services and capital goods	CGST Act (section 54) and CGST Rules	Act change waits for Parliament; the Council fixed the eligibility dates of 1 Nov 2026 and 1 Apr 2027
Section 17(5) blocked credits	CGST Act amendment	Waits for Parliament
Export of services and place of supply	IGST Act amendment (sections 2(6), 13(3), 16(1))	Waits for Parliament
Registration amendments, cancellation, rule 14B for small e commerce sellers	CGST Rules (rules 14B, 19, 21, 21A, 22, 23A); automatic cancellation also needs a CGST Act change	Rules by notification; the Act change waits for Parliament
Rule 86A hearing before credit is blocked	CGST Rules	By notification
Returns: IMS, rules 86C and 86D, rule 61	CGST Rules	From the return for April 2027, after public consultation
Late fee waiver for turnover up to Rs 5 crore	The release does not name the instrument	Watch for a CBIC notification
Rate clarifications and exemptions	Rate notifications and circulars	By notification

Plan for the change, but keep filing and paying under the law as it stands today. A recommendation is not a defence to a notice.

What changes for arrest and prosecution under GST?

The Council recommended the complete withdrawal of arrest powers under GST by omitting section 69 of the CGST Act. Today, section 69 lets a Commissioner order the arrest of a person believed to have committed specified offences. Once section 69 goes, GST officers lose that power.

The Council also recommended four changes to prosecution under section 132:

1. Raise the monetary threshold for prosecution from Rs 1 crore to Rs 5 crore.
2. Omit clause (i) of section 132(1) and delete the words "evades tax" in clause (e). Also delete "or in any other manner deals with" in clause (h).
3. Limit clause (c) of section 132(1) to fraudulent availment of ITC without receipt of goods or services, or without an invoice or bill.
4. Rationalise the punishment for the offences in section 132.

Indian directors of foreign owned subsidiaries ask what personal exposure GST creates for them. After the amendment, arrest under GST will no longer be a risk, and prosecution will be limited to larger and fraud based cases. Until Parliament passes it, the present law applies.

What changes in GST registration?

The Council made five recommendations on registration. Two of them remove the tax officer from routine changes.

Topic	Today	Recommended change	Rule
Filing a new application	Documents asked for vary and queries are common	A circular and FAQs listing required documents; drop boxes in FORM GST REG-01; a guided portal interface	REG-01 and circular
Amending registration details	Many core field changes need officer approval	Automatic acceptance of all amendments except the principal place of business. Rule 14A registrants also get the principal place of business change accepted automatically	Rule 19
Cancellation on your own application	Officer processes FORM GST REG-16	Once all returns are filed and dues paid. Phase 1: automatic where ITC passed on never exceeded Rs 2.5 lakh in a month, or GSTR-10 was filed on time. Phase 2: automatic for all, with GSTR-10 details inside REG-16	CGST Act and Rules
Cancellation by the officer	Wide grounds under rule 21	Some grounds omitted. System based cancellation and revocation for non filing of returns or missing bank details, through new rule 23A and changes to rules 21A and 22	Rules 21, 21A, 22, 23A
Small sellers on e commerce platforms	A place of business is needed in each State	New rule 14B: declare the platform's warehouse in that State as the principal place of business, where ITC passed on is up to Rs 2.5 lakh a month (stock transfers excluded). Registration is granted by the system	Rule 14B

Rule 14A came from the 56th meeting. Under it, the portal grants registration without an officer when the applicant passes on up to Rs 2.5 lakh of ITC a month. The 57th meeting extends that approach to amendments and cancellation.

Our guide on GST registration for foreign companies in India covers the documents officers ask for today.

How will GST refunds work after the 57th meeting?

The Council recommended system based refunds in two phases, through an amendment to section 54 of the CGST Act and the CGST Rules. The aim is to take the officer out of routine refund claims.

Step	Phase 1	Phase 2
Excess balance in the electronic cash ledger	Full refund sanctioned automatically by the system	Same
Acknowledgement or deficiency memo	Time cut from 15 days to 10 days; deemed acknowledgement if the officer does not act in 10 days	System based acknowledgement after verification of the application
Zero rated supplies	90 percent sanctioned provisionally by the system, based on risk evaluation	Full sanction by the system after adjusting pending dues, based on risk evaluation
Inverted duty structure	90 percent sanctioned provisionally by the system, based on risk evaluation	Not covered by the Phase 2 full sanction in the release

The Council also recommended four supporting changes:

1. FORM GST RFD-01 will capture details in a system readable format. Scanned documents will no longer be needed for zero rated and inverted duty claims.
2. Rule 89(4)(C) loses its cap. Today it limits the turnover of zero rated goods to 1.5 times the value of like goods supplied in India.
3. Section 54(14) will say that the Rs 1,000 minimum applies to the total refund across CGST, SGST or UTGST and IGST.
4. Section 115 becomes a standalone provision for interest on refund of pre deposit, with a circular on the rate.

For exporters of services the 90 percent provisional refund is the headline. An exporter that supplies under a Letter of Undertaking (LUT) builds up ITC and claims it back as a refund. Faster refunds reduce the working capital tied up in that credit. Our guide on LUT filing for exporters under GST explains the LUT side.

Refund of credit on input services and capital goods

Today, the refund formula for zero rated supplies counts credit on inputs and input services, but not capital goods. The inverted duty formula counts only inputs. The Council recommended amending clause (ii) of the proviso to section 54(3) and the Rules to change both.

Refund type	Credit added by the recommendation	From when
Inverted duty structure	ITC on input services	ITC availed on or after 1 Nov 2026
Inverted duty structure	ITC on capital goods, spread over 60 months	ITC availed on or after 1 Apr 2027
Zero rated supplies	ITC on capital goods, spread over 60 months	ITC availed on or after 1 Apr 2027

The dates refer to when the credit is availed, not when the law changes. Keep clean records of input service and capital goods credit from these dates, so you can claim once the amendment is in force.

Which blocked input tax credits will be allowed?

The Council recommended amending section 17(5) of the CGST Act to remove the block on credit for these items, among others:

1. Outdoor catering.
2. Health insurance and life insurance.
3. Telecommunication towers.
4. Pipelines laid outside factory premises.
5. Free samples.
6. Goods destroyed or written off on expiry of shelf life, where the law requires it.

The release says "inter alia", so the final amendment may cover more. Our guide on GST input tax credit rules explains how section 17(5) works today.

The insurance change matters to employers. Individual life and health policies have been exempt since 22 Sep 2025, under the 56th meeting recommendations. That exemption covers individual policies only. A group health or life policy that a company buys for its staff still carries GST. Because of section 17(5), that GST is mostly a cost today. Once the amendment passes, the company should be able to claim it.

The Council also recommended limited ITC in the same line of business for three services. They are restaurant and outdoor catering, hotel accommodation up to Rs 7,500 per unit per day, and gym and fitness services. This follows the model already used for passenger transport, tour operators and renting of motor vehicles.

What changes for exporters of services?

The Council made four recommendations on exports and zero rating:

Recommendation	Law	Who it helps
Omit section 2(6)(v), the condition that supplier and recipient are not merely establishments of a distinct person	IGST Act	Indian offices and branches supplying services to their own establishments abroad
Circular on receiving export payment in foreign exchange, or in Indian rupees where RBI permits	Circular	All exporters
Omit section 13(3)(a), so services on goods made physically available by the recipient follow the default rule in section 13(2), the location of the recipient	IGST Act	Indian firms repairing, testing or treating goods for foreign customers
Explanation to section 16(1): goods sold to an overseas buyer but delivered in an SEZ or FTWZ, with payment in convertible foreign exchange or permitted rupees, count as a supply to the SEZ or FTWZ	IGST Act	Manufacturers selling to foreign buyers who warehouse or process in an SEZ or FTWZ

Branch, liaison or project office versus subsidiary

The section 2(6)(v) change helps a narrower group than headlines suggest. Explanation 1 to section 8 of the IGST Act covers one person with establishments in India and abroad. It treats those establishments as distinct persons. Their mutual supplies fail condition (v), so they are not exports today.

A subsidiary incorporated in India is a separate person from its foreign parent. Circular No. 161/17/2021-GST of 20 Sep 2021 already clarified that such a subsidiary is not caught by condition (v). So an Indian Private Limited company billing its parent abroad gains nothing new here.

The change helps an Indian branch office of a foreign company that bills its head office. It also helps an Indian company that supplies services to its own foreign branches. The release says it will facilitate refunds for Indian service providers supplying services "to/through their foreign offices/branches". Our guide on branch office rules in India sets out the RBI side of that choice. Our page on GST on export of services sets out the export conditions that still apply.

What changes in GST notices, penalties and appeals?

The Council asked for a circular on the quality and timing of show cause notices, adjudication orders and appeal orders. It covers proper use of the fraud, wilful misstatement and suppression grounds, and personal hearings. It also recommended these amendments:

Item	Law today	Recommended
Minimum tax for a show cause notice	No minimum	No notice below Rs 10,000 (CGST, SGST, IGST and cess together). Pending notices and appeals below Rs 10,000 decided as if the threshold applied
Voluntary payment of tax, interest and penalty within the time limit	Penalty is a penalty	Penalty treated as a "charge"
Non fraud cases paid after the order	Penalty of 10 percent of tax or Rs 10,000, whichever is higher	5 percent penalty if tax and interest are paid within 30 days of the order (section 73) or 60 days (section 74A)
Minimum penalty of Rs 10,000 in non fraud cases	Applies	Removed
General penalty under section 125	Up to Rs 25,000	Up to Rs 10,000
Pre deposit where the order has only a penalty and no tax	No upper limit	Capped at Rs 40 crore (Rs 20 crore CGST and Rs 20 crore SGST or UTGST), for both first appeal and Tribunal
Blocking of credit under rule 86A	Blocked without a prior hearing	Taxpayer may object and get a personal hearing before the officer decides

The Council also approved amendments to the CGST Act and the GSTAT rules. These align the GST Appellate Tribunal with the Tribunals Reforms Act, 2026. It recommended a validation clause for notices that courts held invalid because they covered more than one financial year.

What changes for e way bills and goods in transit?

The Council recommended amending sections 68, 129 and 130 of the CGST Act. The changes are:

1. A conveyance can be intercepted only on specific intelligence and with authorisation from an officer not below Joint Commissioner.
2. Inspection, detention or seizure can happen only in a State where the supplier or the recipient is located or registered. No interception in transit States.
3. Goods can be inspected, detained or seized in any jurisdiction where no e way bill was generated. The same applies where the conveyance carries no document showing origin or destination.
4. Confiscation under section 130 will not apply to goods or conveyances in transit.

What changes in GST returns?

The Council recommended a new mechanism to correct liability and ITC in returns, so that GSTR-3B matches GSTR-1 and GSTR-2B. The pieces are:

1. Enhancements to GSTR-1, GSTR-1A and IFF for reconciliation with GSTR-3B.
2. New rule 86D: an electronic statement of tax paid on reverse charge and the ITC claimed on it.
3. New rule 86C: an electronic credit reversal and reclaim statement.
4. New sub rules 61(1A) and 61(1B) to correct liability and ITC in GSTR-3B.
5. New sub rule 60(6A) for the Invoice Management System (IMS). A recipient can accept, reject or keep pending a document, with a time limit for pending credit notes.
6. A change to FORM GST DRC-03 so that a payment names the underlying invoice.

The Council recommended bringing this in from the return for April 2027, after a time bound public consultation. The Finance Minister may approve changes based on that feedback.

How will transfers of intellectual property be taxed?

The Council recommended an amendment to Schedule II of the CGST Act. A transfer of title in intellectual property rights, temporary or permanent, would always be a supply of services. The release says this will ease compliance and help cross border transactions involving intellectual property.

For a group that moves trademarks, software or patents between a foreign parent and an Indian subsidiary, this settles the goods or services question. Place of supply and import or export treatment will then follow the rules for services. Our IP assignment and licensing service covers the agreements and the FEMA side of these transfers.

What other compliance changes did the Council recommend?

Recommendation	Who it affects
Late fee waived on a delayed return under section 39(1) if filed by the end of the month in which it was due	Taxpayers with turnover up to Rs 5 crore in the preceding financial year
In principle approval of a concept note for an optional Annual Return Quarterly Payment (ARQP) scheme	Taxpayers with turnover up to Rs 5 crore that supply only to unregistered persons
E invoicing extended to reverse charge supplies received from unregistered persons, and to import of services	Taxpayers with aggregate annual turnover of Rs 5 crore and above
Sections 16, 37 and 39 aligned with the ITC time limit in section 16(4)	All taxpayers
Section 9(5) clarified so that e commerce operators pay tax on notified services whatever their business model	E commerce operators
Circulars on input service distribution, ITC for banks and NBFCs under section 17(4), pre deposit payments, and demonstration vehicles	The sectors named
Rule 96(10) omitted with effect from 23 Oct 2017, following the Supreme Court decision	Exporters whose IGST refunds were limited by rule 96(10)

The e invoicing change reaches many foreign owned subsidiaries. A subsidiary that pays its parent for management, software or support services pays GST on that import under reverse charge. Once this is notified, a subsidiary with turnover of Rs 5 crore or more will have to report that self invoice through e invoicing.

Which GST rates and exemptions changed?

The Council's rate recommendations were mostly clarifications. These are the goods items:

Goods	Recommendation
Sublimation paper	Classified under heading 4809; past cases regularised on an "as is where is" basis
Toys	Entries in notification No. 09/2025-CTR cover all toys in heading 9503, beyond tricycles, scooters and pedal cars
Seaweed extract bio stimulants registered as fertilisers	Classified under heading 3101; past cases regularised
Second hand vehicles under the margin scheme	ITC allowed on other inputs and services; the restriction applies only to tax on the vehicles bought
Plastic, electronic and tyre waste and scrap, and used cooking oil	Reverse charge on supplies from unregistered to registered persons; TDS at 2 percent on supplies between registered persons
Psyllium seeds (isabgol)	Nil rate, fresh, chilled, frozen or dried
Retreaded tractor tyres	Rate aligned with new tractor tyres
Compensation cess on CSD vehicles and canteen aerated drinks	Exempted for the past periods named in the release

These are the services items:

Service	Recommendation
Passenger transport and rental with operator using electric vehicles, with charging included	Option of 5 percent with restricted ITC
Delivery services through e commerce operators (other than courier and postal)	Brought under section 9(5) where the delivery person is not liable to register; 5 percent without ITC; GTA exemption under entry 21A excluded for goods ordered through an e commerce operator
Motor vehicle leasing	Clarification on recovery of registration, road tax, insurance and FASTag charges
Restaurants, outdoor catering, hotels up to Rs 7,500 per unit per day, gyms	Limited ITC in the same line of business
Helicopter seat sharing to and from the North East, Sikkim and Bagdogra	Exempt
Storage of seeds for sowing, coffee curing, Seamen's Provident Fund Organisation	Exempt
Research and development	Self certification by the head of the institution for the exemption under entry 44A
Import of services by an Indian establishment of a foreign shipping line from a related person, without consideration	Exempt; past period regularised
NHAI toll operate transfer concessions and O&M services	Exemption for the concession grant; special valuation and timing for O&M
Funds transfer pricing in banks	Notional interest between branches counts as "interest"

What this means for foreign owned subsidiaries and branches

The table maps the recommendations to the structures we work with.

Structure	What helps	What to watch
Indian Private Limited subsidiary of a foreign company	Unblocked credit on group health and life insurance; faster refunds on exports; lower penalties; no arrest risk once section 69 goes	E invoicing of reverse charge self invoices for imported services at turnover of Rs 5 crore and above
Indian branch or project office billing its head office	Export status once section 2(6)(v) is omitted, so LUT and refunds become possible	Until the IGST Act changes, IGST on supplies to the head office continues
Exporter of goods	Removal of the 1.5 times cap in rule 89(4)(C); SEZ and FTWZ delivery clarity	Capital goods credit refund only for ITC availed from 1 Apr 2027
Manufacturer with inverted duty	Refund of input service credit availed from 1 Nov 2026	The amended formula is not yet notified
Small B2C business	Optional ARQP scheme (in principle); late fee waiver within the month	ARQP is a concept note, not a scheme yet

Our foreign subsidiary registration service covers the setup, and our GST registration and filing service covers the monthly work.

Worked example

An Indian branch billing its head office

A US company runs a branch office in Bengaluru. The branch provides software support to the head office and bills Rs 2,00,00,000 a year. Payment arrives in US dollars.

Today the branch and the head office are establishments of a distinct person. The supply fails condition (v) of section 2(6) of the IGST Act, so it is not an export. The place of supply is outside India, so the branch charges IGST at 18 percent: Rs 36,00,000 a year. The head office cannot claim that tax back in the US, so it is a cost.

Once section 2(6)(v) is omitted, the same supply can qualify as an export. The other four conditions in section 2(6) must still be met. The branch then supplies under an LUT without paying IGST and claims a refund of the ITC on its inputs and input services. The Rs 36,00,000 stops being a cost. This applies only once Parliament amends the IGST Act.

A non fraud demand under section 74A

An Indian subsidiary receives an order under section 74A for financial year 2024 to 2025. The tax demanded is Rs 4,00,000 and the case involves no fraud.

Today, the penalty in a non fraud case is 10 percent of the tax or Rs 10,000, whichever is higher: Rs 40,000. Under the recommendation, paying the tax and interest within 60 days of the order cuts the penalty to 5 percent: Rs 20,000. The saving is Rs 20,000, once the amendment is in force.

Common mistakes

1. Treating the recommendations as law. Section 69, section 17(5) and section 2(6)(v) stay as they are until Parliament amends them. Keep paying and filing under the current law.
2. Reversing or claiming blocked credit early. Do not claim ITC on group insurance or outdoor catering until the amended section 17(5) is in force.
3. Assuming every foreign owned company gains from the section 2(6)(v) change. A subsidiary was already outside condition (v) under Circular No. 161/17/2021-GST. The change helps branches and offices of the same legal person.
4. Losing the evidence for future refunds. Input service credit from 1 Nov 2026 and capital goods credit from 1 Apr 2027 become refundable later. Track them separately in your books from those dates.
5. Ignoring the e invoicing change for reverse charge. A subsidiary with turnover of Rs 5 crore and above that imports services should plan for e invoicing of its self invoices.
6. Missing the public consultation on returns. The new correction mechanism starts with the April 2027 return. Comments go in during the consultation, not after.

Checklist for the next 90 days

1. Read the PIB release and keep a copy with your GST file, so your team works from the official text.
2. Map each recommendation to your registrations: subsidiary, branch, SEZ unit or e commerce seller.
3. Tag ITC on input services in your books from 1 Nov 2026 if you have an inverted duty structure.
4. Plan capital goods purchases with the 1 Apr 2027 refund date in mind if you export or face inverted duty.
5. List the group insurance, outdoor catering and free sample costs that carry blocked credit today, so you can claim once the law changes.
6. Check whether your Indian branch bills its head office, and prepare an LUT for when section 2(6)(v) is omitted.
7. Confirm your aggregate turnover, and prepare to e invoice reverse charge self invoices if it is Rs 5 crore or more.
8. Track CBIC notifications and the next Finance Bill for the CGST Act and IGST Act amendments.
9. Respond to any pending notice under the present law. Do not rely on the Rs 10,000 threshold until it is in force.

For a note on your company, email [email protected] with your GSTIN and a one line description of your structure.

Frequently Asked Questions

When was the 57th GST Council meeting held?+

The 57th GST Council meeting was held on 8 Oct 2026 in New Delhi, chaired by the Union Finance Minister. The Ministry of Finance published the recommendations through PIB the same evening at 7:03 PM. The meeting focused on process reforms after the 56th meeting in 2025 dealt with rate rationalisation.

Has GST arrest power been removed?+

Not yet. The Council recommended withdrawing arrest powers by omitting section 69 of the CGST Act. That needs an amendment passed by Parliament. Until the amendment is in force, section 69 remains part of the law, even though the policy direction is now clear.

What is the new prosecution threshold under GST?+

The Council recommended raising the monetary threshold for prosecution from Rs 1 crore to Rs 5 crore. It also recommended narrowing several offences in section 132(1) of the CGST Act. These changes need an amendment to the CGST Act before they apply.

What is the new general penalty under section 125?+

The Council recommended reducing the maximum general penalty under section 125 of the CGST Act from Rs 25,000 to Rs 10,000. Section 125 applies where the Act names no separate penalty for a contravention. The reduction needs an amendment to the Act.

Will small GST demands still get a show cause notice?+

The Council recommended that no show cause notice be issued where the tax involved is below Rs 10,000, counting CGST, SGST, IGST and cess together. Pending notices and appeals below Rs 10,000 would be decided as if the threshold had applied when they were issued.

Which blocked credits under section 17(5) will be allowed?+

The release names outdoor catering, health and life insurance, telecommunication towers, pipelines laid outside factory premises, free samples, and goods destroyed or written off on expiry of shelf life where the law requires it. It says "inter alia", so the final amendment to section 17(5) may cover more items.

Can a company claim GST credit on group health insurance now?+

Not yet. Section 17(5) still blocks it in most cases. Individual health and life policies have been exempt since 22 Sep 2025, but group policies still carry GST. Once the recommended amendment to section 17(5) is in force, a company should be able to claim the credit.

What changes for refunds of input service credit?+

For refunds under the inverted duty structure, the Council recommended allowing refund of ITC on input services availed on or after 1 Nov 2026. Today the inverted duty formula counts only credit on inputs. The change needs an amendment to section 54(3) and the CGST Rules.

What changes for refunds of capital goods credit?+

The Council recommended refund of ITC on capital goods for zero rated supplies and inverted duty structure cases. The refund will be spread over 60 months and will apply to ITC on capital goods availed on or after 1 Apr 2027.

Does an Indian subsidiary billing its foreign parent gain from the section 2(6)(v) change?+

No. A subsidiary incorporated in India is a separate person from its foreign parent, and Circular No. 161/17/2021-GST of 20 Sep 2021 already confirmed that condition (v) does not apply to it. The change helps Indian branches and offices billing their own head office or foreign branches.

What is the ARQP scheme?+

ARQP stands for Annual Return Quarterly Payment. The Council approved in principle a concept note for an optional scheme for taxpayers with turnover up to Rs 5 crore in the preceding financial year that supply only to unregistered persons. It is a concept note, not a notified scheme.

Who gets the late fee waiver?+

Taxpayers with annual turnover up to Rs 5 crore in the preceding financial year. The waiver covers late fee on a return under section 39(1) that is filed late but before the end of the month in which it was due. Watch for the CBIC notification that gives effect to it.

Will e invoicing apply to imports of services?+

The Council recommended extending e invoicing to the import of services and to reverse charge supplies received from unregistered persons, for taxpayers with aggregate annual turnover of Rs 5 crore and above. A subsidiary that pays its foreign parent for services would report its self invoice this way once notified.

When does the new GST return correction mechanism start?+

The Council recommended that the alternate mechanism for amending liability and ITC apply from the return for April 2027. It also recommended a time bound public consultation first. The Finance Minister may approve changes based on the feedback.

How will intellectual property transfers be taxed under GST?+

The Council recommended an amendment to Schedule II of the CGST Act. A transfer of title in intellectual property rights, temporary or permanent, would always be a supply of services. Cross border transfers between group companies would then follow the place of supply rules for services.

Do the 57th GST Council recommendations change GST rates?+

Mostly through clarifications and exemptions. Examples include a nil rate for psyllium seeds, a 5 percent option for electric vehicle passenger transport with charging included, and exemptions for storage of sowing seeds and coffee curing. The 2025 rate structure from the 56th meeting stays in place.

Sources

• Ministry of Finance (PIB Delhi), Recommendations of the 57th Meeting of the GST Council, 8 Oct 2026, https://www.pib.gov.in/PressReleasePage.aspx?PRID=2320934
• Ministry of Finance (PIB), Recommendations of the 56th Meeting of the GST Council, 3 Sep 2025, https://www.pib.gov.in/PressReleasePage.aspx?PRID=2163555
• CBIC, Circular No. 161/17/2021-GST, Clarification relating to export of services, condition (v) of section 2(6) of the IGST Act, 20 Sep 2021, https://gstcouncil.gov.in/sites/default/files/2024-06/circular_20no._20161_14_2021_gst.pdf