TaxTMI 
TaxTMI 
10 Oct 2026 
Though the 57th meeting of the GST Council was held after a gap of one full year, one full month and a few days after the 56th GST Council meeting, there are reasons to cheer. Several proposals have been approved by the council and few of them are expected to be implemented with effect from 01/11/2026, few more with effect from 01/04/2027 and the rest of the proposals from a later date. Let us see the need as well as the effect of these proposals in a detailed manner being covered in three parts.
Proposal one: Amendment proposed in Section 125. The section 125 is already worded in such a manner that the penalty may go up to 25,000 based on the quantum of contravention. However, the adjudicating authority always levy a minimum penalty of 25,000 under CGST with equal amount under SGST as well. As this is unfair and totally against the sprit of the legislation, now it is proposed to make the maximum penalty as 10,000 in place of 25,000 which is a welcome measure.
Proposal two: While there was no minimum prescribed amount on invocation of SCN under 73 or 74, Section 74A has a limit of 1,000 from 01/04/2024. Now, it is proposed to have a minimum amount of 10,000 under 73, 74 as well as 74A (CGST plus SGST plus IGST plus Cess ) This is a welcome step to avoid disputes on small amounts. The best part is that once the same is implemented, it will cover even the present cases which are not adjudicated as on the date of implementation. This makes clear the intention of the Government on reduction in litigation.
Proposal three: Para 7.1 of the press release dated 08/10/2026 reads as " 7.1 The GST Council recommended issuance of a circular to provide comprehensive guidelines to the tax officers to streamline process of issuance of demand notices, adjudication orders and appeal orders, inter alia, covering issues relating to, quality of demand notices and adjudication/appeal orders, timely issuance such notices/orders, proper invocation of grounds of fraud, wilful misstatement or suppression of facts only based on merits in each case, adherence to the principles of natural justice including the conduct of personal hearings".
The above proposal is the best one amongst all the proposals taken up in this meeting. This step was long overdue as the jurisdictional high courts were unnecessarily burdened with huge writs under GST matters. The GSTAT is also established only after a considerable delay. However, day in and day out, several issues are getting completely resolved due to the crystal -clear verdicts from Supreme Court, High Courts as well as GSTAT. The fact that as on 08/10/2026, the GSTAT has already passed 354 decisions so far where the issues are decided after detailed discussions and also by recording the reasons for such decisions, the circular as proposed above shall definitely help in reduction in avoidable litigation as well as shall improve the quality of adjudication which reduces the number of further appeals. This is a very good move after careful though at the most appropriate time, as any further delay would cause huge damage.
Proposal four: I have been making several appeals to all concerned on abolition of section 17(5) in total. This sub-section 5 of section 17 is the one which does not have any strong reasoning for justification of the existence of that sub section. Amongst all clauses, clause d is the one which affects each and every citizen of India who wish to have a residential home of their own as ITC is blocked on all materials as well as services on construction of immovable property. This has huge ramification on cascading effect which increases the cost on which GST is also levied. Through this write up, I appeal to the GST Council to consider deletion of section 17(5) (d) with effect from 01/04/2027 through the 58th GST Council meeting. Be that as it may, something is always better than nothing and the move as below is exactly the same. The Council recommended amendment in section 17(5) of the CGST Act, 2017 to remove the restrictions on availment of ITC inter-alia on the supplies of outdoor catering, health and life insurance, telecommunication towers, pipelines laid outside factory premises, free samples, goods destroyed or written off on expiry of shelf life as required by law. This will reduce the cascading of taxes and ensure a smoother flow of ITC across the supply chain.
Proposal five: The GST Council approved in-principle a concept note for an optional Annual Return Quarterly Payment (ARQP) scheme for taxpayers having an aggregate turnover equal to or less than Rs. 5 Crore in the preceding financial year and engaged exclusively in supplies to unregistered persons (B2C supplies). This is yet another proposal which is really laudable. Whomsoever is the person who is behind this move has properly understood the difficulties of retail traders dealing mainly in groceries situated at small villages. Due to severe competition amongst several shop owners dealing on groceries (other than departmental stores), the profit margins are less with several challenges to run the shop. Despite several odds, still they continue the retail trade as this is the one and only source for livelihood. Since GST returns are to be filed online mode, those traders have to essentially depend on local tax consultants to file even the returns. The present system of QRMP itself is a burden on them. The proposal as and when implemented shall definitely help thousands of retail traders who are associated with trades associations.
Conclusion: An analysis of the press release makes us feel happy as all the proposals are aimed only in process simplification and not on revenue augmentation. The entire team of GST Council consisting members as well as officials associated with the Counsil deserve appreciations for all the proposals. The other proposals shall be discussed in a phased manner.