57th GST Council Meeting: Arrest Powers Dropped, Prosecution Limit Raised to ₹5 Crore, No Notice Below ₹10,000
The 57th GST Council meeting on 8 October 2026 recommended removing arrest powers, raising the prosecution limit to ₹5 crore and stopping notices for tax under ₹10,000. Here are the key changes for traders, exporters and consumers.
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57th GST Council Meeting: What Was Decided on 8 October 2026
The GST Council held its 57th meeting on 8 October 2026 in New Delhi. Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman chaired it. The Ministry of Finance released the recommendations through PIB the same evening. The 56th meeting last year dealt with rate rationalisation. This meeting dealt mainly with process reforms: registration, returns, refunds, notices, penalties and prosecution, along with a few rate changes.
The headline decisions are that arrest powers under GST are to go, the prosecution threshold rises from ₹1 crore to ₹5 crore, and no show cause notice will be issued where the tax involved is below ₹10,000. Small traders, shopkeepers, exporters and ordinary consumers are all affected in some way. Below is a simple guide to the decisions that matter most.
Important: These are recommendations of the GST Council. They take legal effect only when the government issues the circulars and notifications or amends the law. Until then, the current rules apply.
Overview Table
| Item | Details |
|---|---|
| Meeting | 57th Meeting of the GST Council |
| Date and place | 8 October 2026, New Delhi |
| Chaired by | Smt. Nirmala Sitharaman, Union Finance & Corporate Affairs Minister |
| Press release | PIB (Ministry of Finance), posted 8 October 2026, 7:03 PM |
| Main focus | Registration, returns, refunds, dispute resolution, ease of doing business |
| Arrest powers | Section 69 of the CGST Act to be omitted completely |
| Prosecution threshold | Raised from ₹1 crore to ₹5 crore |
| Show cause notice | Not issued if tax is below ₹10,000 |
| Status | Recommendations; legal effect only after notifications or law changes |
Important Dates
| Event | Date |
|---|---|
| 57th GST Council meeting | 8 October 2026 |
| PIB press release posted | 8 October 2026, 7:03 PM |
| Refund of accumulated ITC on input services (inverted duty) | For ITC availed on or after 1 November 2026 |
| Refund of ITC on capital goods | For ITC availed on or after 1 April 2027 |
| New mismatch-reduction return mechanism | May come into force from the return of April 2027 |
Big Relief: No Arrest, Higher Prosecution Limit
- Arrest powers withdrawn: The Council recommended complete withdrawal of arrest powers under GST by omitting Section 69 of the CGST Act, 2017.
- Prosecution only for bigger cases: The money limit for prosecution under Section 132 goes up from ₹1 crore to ₹5 crore. Some clauses of Section 132 are to be removed or narrowed and the punishments rationalised.
- Fewer stoppages of goods in transit: Goods are to be intercepted only on specific intelligence, with authorisation from an officer not below Joint Commissioner rank. A transit state will not intercept goods; inspection or detention will happen only in the state of the supplier or recipient. Where there is no e-way bill or document showing origin and destination, action can still be taken anywhere.
Lower Penalties and Fewer Notices
| Provision | Current position | Recommended change |
|---|---|---|
| Show cause notice (Sections 73, 74, 74A) | No minimum amount | No notice if tax (CGST + SGST + IGST + Cess) is below ₹10,000 |
| Maximum general penalty (Section 125) | ₹25,000 | ₹10,000 |
| Minimum penalty in non-fraud cases | ₹10,000 | Removed |
| Quick payment (non-fraud) | – | Penalty of only 5% if tax and interest are paid within 30 days (Sec 73) or 60 days (Sec 74A) of the order |
| Pre-deposit for penalty-only appeals | – | Capped at ₹40 crore (₹20 crore CGST + ₹20 crore SGST/UTGST) |
Pending notices and appeals below ₹10,000 are also to be treated as if the new threshold had applied when they were issued.
Easier Registration and Returns for Small Businesses
- Automatic registration: Already given by the system where the applicant does not intend to pass on more than ₹2.5 lakh of ITC per month. A circular with a document list and FAQs, a revised REG-01 form and a simpler portal are planned.
- Small e-commerce sellers: A new rule 14B will give a simple, automatic registration route to small sellers who have no physical place of business in a state and sell through an e-commerce operator's warehouse.
- Cancellation: Cancellation applications are to be accepted automatically once returns are filed and dues paid, in phases.
- Late fee waiver: For taxpayers with turnover up to ₹5 crore in the previous financial year, the late fee under Section 39(1) will be waived if the delayed return is filed by the end of the month in which it was due.
- ARQP scheme: The Council approved in principle a concept note for an optional Annual Return Quarterly Payment (ARQP) scheme for taxpayers with turnover up to ₹5 crore who supply only to unregistered persons (B2C).
- Return mismatches: GSTR-1/1A/IFF are to be better matched with GSTR-3B, with new correction facilities. This may come into force from the return of April 2027, after public comments.
Faster Refunds
- The time limit for an acknowledgement or deficiency memo on a refund claim falls from 15 days to 10 days.
- For zero-rated supplies (exports) and inverted duty claims, 90% of the amount claimed will be sanctioned provisionally and automatically by the system, based on risk assessment.
- The ₹1,000 minimum refund limit will apply to the total refund amount (CGST + SGST/UTGST + IGST together).
- Refund of accumulated ITC on input services under inverted duty will be available for ITC availed on or after 1 November 2026, and on capital goods for ITC availed on or after 1 April 2027.
Rate Changes That Touch Consumers
- Isabgol (psyllium seeds): NIL GST, whether the seeds are fresh, chilled, frozen or dried.
- Electric vehicle transport: Passenger transport and rental with operator using EVs gets an option to pay 5% GST with restricted ITC.
- Delivery through e-commerce: 5% GST without ITC for delivery services in relation to goods ordered via e-commerce operators.
- Hotels, restaurants and gyms: Limited ITC in the same line of business for restaurant and outdoor catering, hotel accommodation up to ₹7,500 per unit per day, and gym and fitness services.
How to Read the Official Decisions (Step by Step)
- Open the PIB release "Recommendations of the 57th Meeting of the GST Council" (PRID 2320934) from the links table below.
- Read the sections on process reforms (registration, returns, refunds, dispute resolution) and rate changes.
- Download the same press release as a PDF from the GST Council website (gstcouncil.gov.in, Press Release section).
- Track new circulars and notifications on the CBIC and GST portals. Only these bring the changes into force.
- Small taxpayers should talk to their tax practitioner before changing their filing, and should keep filing returns on time under the current rules.
Important Official Links
| Purpose | Link |
|---|---|
| PIB release: Recommendations of the 57th GST Council Meeting | pib.gov.in (PRID 2320934) |
| Press release PDF on GST Council website | gstcouncil.gov.in |
| GST Council press releases page | gstcouncil.gov.in/press-release |
| PM welcomes the GST Council's recommendations | pib.gov.in (PRID 2321077) |
Frequently Asked Questions
When was the 57th GST Council meeting held?
It was held on 8 October 2026 in New Delhi, chaired by Union Finance Minister Smt. Nirmala Sitharaman.
Has arrest under GST been removed?
The Council has recommended complete withdrawal of arrest powers by omitting Section 69 of the CGST Act, 2017. It takes effect only after Parliament amends the law.
What is the new prosecution threshold?
The monetary threshold for prosecution is to be raised from ₹1 crore to ₹5 crore.
Will small traders get a show cause notice for small amounts?
No. The Council recommended a minimum threshold of ₹10,000 (CGST + SGST + IGST + Cess) for issuing show cause notices.
Is there any relief on late fees?
Yes. Taxpayers with turnover up to ₹5 crore in the previous year will get a late fee waiver if the delayed return is filed by the end of the month in which it was due.
Are these changes already in force?
No. They are recommendations. They apply only after the government issues notifications or circulars or amends the law.
Conclusion
The 57th GST Council meeting is mainly a compliance-relief package. It removes GST arrest powers, raises the prosecution limit to ₹5 crore, stops notices for tax below ₹10,000, lowers penalties, speeds up refunds and makes registration easier. Small businesses and exporters gain the most, and consumers see NIL GST on isabgol and a 5% option for EV transport. Watch for the official notifications that will bring each change into force.
References
- https://www.pib.gov.in/PressReleasePage.aspx?PRID=2320934 – PIB, Ministry of Finance, "Recommendations of the 57th Meeting of the GST Council", 8 October 2026
- https://www.gstcouncil.gov.in/sites/default/files/2026-10/press_release.pdf – GST Council, Press Release: Recommendations of the 57th Meeting of the GST Council, 8 October 2026
- https://www.pib.gov.in/PressReleseDetail.aspx?PRID=2321077 – PIB, Prime Minister's Office, "Prime Minister welcomes GST Council's recommendations for simpler, trust based tax administration", October 2026