Mint Explainer | GST Council meeting: what could change for refunds, enforcement and rate changes

The 57th GST Council meeting could reshape rules on tax refunds, input tax credit, enforcement, buyer protection and the frequency of GST rate changes.

The 57th GST Council meeting comes at a critical stage in the evolution of India’s nine-year-old goods and services tax (GST) regime, with the focus shifting from broad rate rationalization to the system’s plumbing—from refunds and input tax credit to registration, enforcement, litigation and the use of tax data.

The meeting, after being rescheduled twice, is finally set for 8 October. It was originally scheduled for 12 September and later moved to 7 October. Mint explains the proposals before the Council that could affect exporters, manufacturers, smaller businesses, e-commerce sellers and patients dependent on imported medicines.

What could change in GST enforcement?

The Council may consider removing the power of arrest under GST by omitting Section 69 of the CGST Act, which allows the commissioner to authorise an arrest. It may also raise the prosecution threshold and take some lower-value offences out of the criminal framework, distinguishing inadvertent compliance errors from deliberate tax evasion.

“The proposed decriminalization, with judicial oversight of arrests and routine ITC and classification disputes kept outside criminal reach, would be a forward-looking step that treats honest taxpayers as partners rather than suspects. Unblocking credit on employee group insurance and outdoor catering would aid cash flow,” said Jitendra Motwani, partner, Tax Practice, Trilegal.

Will GST refunds and input tax credit become easier?

The Council may consider releasing 90% of eligible export refunds provisionally within 7–10 days after risk-based checks, with the balance released after detailed verification. It may also allow refunds of taxes embedded in plant and machinery and input services under the inverted duty structure through a graded mechanism over five years.

On input tax credit (ITC), the Council may relax restrictions on expenses including outdoor catering, life and health insurance for employees, telecom towers, pipelines outside factory premises, certain free samples and goods destroyed after expiry where required by law. It may also decide on ITC for motor vehicles and related insurance, repairs, maintenance and leasing or hiring services.

Wider credit could reduce embedded tax costs for sectors such as telecom, infrastructure and pharmaceuticals.

Will genuine buyers be protected from suppliers’ defaults?

Another proposal seeks to reduce the burden on genuine buyers to establish that a supplier has paid tax, while retaining safeguards against fake invoices and fraudulent claims. The aim is to prevent genuine transactions from automatically losing ITC because of a supplier’s subsequent default.

“GST liability must not be shifted onto genuine buyers if a seller defaults on tax payments. Government authorities issue GST registrations only after extensive KYC compliance; therefore, enforcement agencies must trace and penalize defaulting sellers directly. Legitimate businesses purchasing goods in good faith cannot and should not be held liable when a registered seller fails to deposit tax,” said Kailash Lakhyani, founder and chairman, All India Mobile Retailers Association, which represents 150,000 mobile retailers in India.

Could GST enforcement become more targeted?

The Council may also make goods interception more intelligence-led, requiring specific information and appropriate authorisation before action.

The proposal would use data analytics and risk assessment to identify suspicious consignments rather than routinely stopping compliant businesses, potentially reducing transit delays.

Why is GST data sharing expanding—and what about rare-disease medicines?

The Council is likely to consider wider sharing of GST data with the ministry of statistics and programme implementation (MoSPI) to develop an index for the unincorporated sector, estimate trade margins and build a Statistical Business Register. MoSPI has sought data from GSTR-3B and GSTR-9, including monthly information on outward supplies, reverse-charge supplies and eligible ITC.

Separately, the Council may consider expanding the IGST exemption for imported medicines and specialized foods for seven rare diseases, which can currently attract up to 18% IGST.

Will GST rate changes be limited to once a year?

The Council is considering limiting GST rate changes to once a fiscal year, with changes taking effect from 1 April of the following year. There is currently no such restriction.

Such a move could make GST rates more predictable for businesses and consumers. “Limiting GST rate changes to once a year would improve predictability for businesses and reduce uncertainty in pricing, contracts and investment decisions. A more stable rate structure would also make compliance easier,” said Abhash Kumar, assistant professor of economics, Delhi University.

The proposals come as GST collections continue to grow. Gross collections rose 14.7% in September to ₹2.04 trillion from ₹1.77 trillion a year earlier, according to finance ministry data released on 1 October. Import tax collections rose nearly 26%, driving much of the increase.

September was the third month this fiscal year in which collections crossed ₹2 trillion. The ₹2.04 trillion haul was below July’s ₹2.11 trillion, the second-highest monthly collection since GST was introduced in July 2017, after the record ₹2.43 trillion in April.

Taken together, the proposals point to a GST regime moving beyond headline rate rationalisation towards more predictable day-to-day functioning—through easier access to refunds and credit, narrower criminal action over compliance disputes, more targeted enforcement and greater certainty over tax rates.

About the Author

Dhirendra Kumar is a seasoned policy reporter with about 20 years of experience in deep, on-ground reporting across key economic and governance sectors. His work spans finance, public expenditure, disinvestment, public sector enterprises, textiles, trade, consumer affairs, and agriculture, with a strong focus on uncovering structural policy shifts and their real-world impact.<br><br>Kumar has been awarded the Chaudhary Charan Singh Award for Excellence in Journalism in Agricultural Research and Development, recognising his contribution to reporting on critical issues in the farm sector. He has also been a recipient of a fellowship in international trade from the National Press Foundation, which has further strengthened his coverage of global trade dynamics and their implications for India.<br><br>Kumar is known for breaking complex policy developments into clear, accessible stories. His reporting focuses on uncovering under-reported trends, explaining policy shifts, and helping readers stay informed about developments that shape India’s economic landscape.