Status note: Updated 11 October 2026. The Government has released FAQs on the recommendations of the 57th GST Council meeting held on 8 October 2026. These are recommendations, not yet law. They take effect only through amendments to the CGST/IGST Acts and Rules, notifications and circulars. Continue to comply with the law as it stands today.
A Hyderabad exporter with two years of accumulated credit reads that GST refunds will be “automatic”. A trader reads that “arrest powers are going”. A transporter reads that trucks cannot be stopped in transit States. Each headline is partly right. The detail sits in the official FAQs, and that detail decides who benefits, from which date, and on what conditions.
The short answer: the 57th GST Council FAQs clarify how the recommended reforms are intended to work on registration, refunds, input tax credit (ITC), show cause notices, prosecution, e-way bill interception and rate and exemption issues. They also fix some dates: ITC on input services from 1 November 2026 and on capital goods from 1 April 2027 for refund purposes. None of this is enforceable until the law and rules are amended.
The 57th GST Council FAQs at a glance
| Area | What the FAQs clarify | Date / status |
|---|---|---|
| Registration | Amended FORM GST REG-01, document checklist, most amendments auto-processed, auto-acceptance of cancellation, simplified registration for small e-commerce sellers (rule 14B) | Circular, form and rule changes awaited |
| Refunds | Two-phase, risk-based, system-driven refunds; 90% provisional refund for low-risk zero-rated and inverted duty claims; 10-day acknowledgement | Phase I and Phase II as per system readiness; no date in FAQs |
| ITC refund base | ITC on input services (inverted duty) and capital goods (zero-rated and inverted duty) to enter “Net ITC” | Input services: ITC availed on/after 01.11.2026. Capital goods: on/after 01.04.2027 |
| Litigation | ₹10,000 minimum tax for show cause notices; “penalty” becomes “charge” on voluntary payment | Law amendment awaited |
| Arrest and prosecution | Arrest provisions to be removed; prosecution threshold ₹1 crore to ₹5 crore; punishment rationalised | Law amendment awaited |
| E-way bill | Interception only on a Joint Commissioner’s written authorisation; no action by transit States in specified cases | Law amendment awaited |
| Exports | Section 13(3)(a), IGST Act to be omitted | Law amendment awaited |
| Goods and services | Classification, TDS/RCM on specified scrap, exemptions and rate clarifications | Notifications awaited |
1. GST registration: what the FAQs say
How will the registration application change?
The registration form (FORM GST REG-01) is to be amended with drop-down boxes and tool tips. A circular will list the information and documents needed, so that applicants can keep them ready. When an applicant selects the type of premises (for example owned or rented), the portal will display only the documents relevant to that type for the Principal Place of Business (PPoB) and Additional Place of Business (APoB). The FAQs state that no additional documents are to be sought by the officer.
Which amendments will need no officer approval?
Amendments to the legal name, constitution of the business and APoB, which were treated as “core” amendments needing officer approval, will become “non-core” and be processed automatically by the system. A change of PPoB is also non-core, but only for registrations obtained under rule 14A. For all other registrations, a PPoB change remains a core amendment needing the officer’s approval.
| Change | Route | Processing |
|---|---|---|
| Legal name | FORM GST REG-14 | Amended by the system after successful PAN validation |
| Additional Place of Business | FORM GST REG-14 with proof of place of business | Automatic; no need to wait for an earlier application to be approved |
| PPoB – rule 14A registrants | FORM GST REG-14 | Automatic |
| PPoB – normal taxpayers (rule 9) | FORM GST REG-14 | No discrepancy: approval within 15 days. Discrepancy: show cause notice within 15 days, reply within 7 working days, officer to act within 7 working days of the reply |
When can registration be cancelled, and how fast?
Cancellation can be applied for in FORM GST REG-16 where the business is discontinued, closed or fully transferred; there is a change in constitution resulting in a new PAN; the business is amalgamated, demerged or disposed of; or the person is no longer liable to be registered. The application should be filed within 30 days of the event. There is no such time limit on the death of a sole proprietor.
For auto-acceptance, three conditions apply: all returns due on or before the date of application must be filed; any tax, interest or penalty not stayed by a court, Tribunal or Appellate Authority must be paid; and if details of outward supplies were furnished in FORM GSTR-1 or the Invoice Furnishing Facility (IFF) for a tax period, FORM GSTR-3B for that period must be filed first. Where ITC passed on never exceeded ₹2.5 lakh in any month, the application is accepted automatically and communicated in FORM GST REG-38. Where it did exceed that, Phase 1 requires filing REG-16 along with the final return in FORM GSTR-10 for automated processing; in Phase 2, filing REG-16 alone is enough.
What about system suspension and revocation?
Where registration is suspended by the system for non-filing of returns for six consecutive months or non-furnishing of bank account details under rule 10A, section 29 is to be amended so that cancellation can be done by the system without an officer. After the defaults are cured, an application for revocation in FORM GST REG-21 may be filed within 180 days of the date of cancellation, with system-based revocation.
The FAQs also state that the Council recommended omitting four grounds for cancellation from rule 21: (i) availing ITC in violation of section 16 or the rules; (ii) violation of the anti-profiteering provision in section 171; (iii) violation of rule 86B; and (iv) outward supplies in FORM GSTR-1/1A for one or more tax periods exceeding those declared in FORM GSTR-3B.
Simplified registration for small sellers on e-commerce platforms (rule 14B)
This is an optional scheme for sellers who supply goods exclusively through electronic commerce operators (ECOs). Key features as per the FAQs:
- Available to sellers intending to pass on ITC of less than ₹2.5 lakh a month (excluding stock transfers); output tax liability on supplies to registered persons (other than those on the same PAN) must not exceed ₹2.5 lakh per month.
- The ECO’s warehouse is declared as the PPoB in a State or Union territory where the seller has no physical presence. The ECO must consent within 7 working days; if it does not, the application is deemed rejected.
- Biometric-based Aadhaar authentication and physical verification happen in the home State. The applicant must already hold a regular registration there, other than under this scheme or rule 14A.
- One registration per PAN per State or Union territory. Non-ECO supplies cannot be made on this registration. The certificate and GSTIN need not be displayed at the ECO warehouse.
- If the seller is registered in the home State only under rule 14A, a withdrawal in FORM GST REG-32 is needed first. Withdrawal from the scheme is also by REG-32.
- If the ECO withdraws consent, the seller must file REG-14 within 30 days to change the PPoB/APoB. Failing that, or if the home-State registration is cancelled, the registration is deemed cancelled in FORM GST REG-38.
- Books and records are to be maintained at the PPoB in the home State and produced when demanded by the proper officer of the State where registration under rule 14B is held.
2. GST refunds: the FAQ clarifications that matter
The detailed analysis of the refund reforms is in our post on the refund reforms of the 57th GST Council meeting. The FAQs add the following practical clarifications.
How will the two phases work?
Phase I: the time limit for acknowledgement (FORM GST RFD-02) or deficiency memo (RFD-03) is reduced from 15 to 10 days. If neither is issued, the application is deemed acknowledged. For acknowledged low-risk refund claims on zero-rated supplies or inverted duty structure, the system will sanction 90% of the claimed amount provisionally, with no officer interface at that stage. The provisional refund order in FORM GST RFD-04 is proposed to be issued within three working days of acknowledgement. Refund of excess balance in the electronic cash ledger will be processed in a fully automated manner, without any officer role.
Phase II: the system will auto-acknowledge after validating the information in the application. On a mismatch, the applicant is told of the errors and files a fresh application; if validation fails again, the application goes to the proper officer. For low-risk zero-rated claims, the final refund is also to be given automatically. Final scrutiny of inverted duty claims remains with the officer after the 90% provisional refund.
Points the FAQs make that are easy to miss
| Issue | FAQ position |
|---|---|
| Does deemed acknowledgement mean automatic refund? | No. It only means the application is treated as received and complete, to start the processing timeline. Further processing follows the risk-based framework. |
| Can a deficiency memo follow an acknowledgement? | No. Once acknowledged, no deficiency memo can be issued on any ground. |
| After a deficiency memo? | The application is not processed further. A fresh application in FORM GST RFD-01 must be filed for the same period. ITC or cash debited at the time of filing is re-credited automatically. |
| Who is excluded from automated provisional refund? | Notified persons supplying commodities such as areca nuts, pan masala, tobacco and manufactured tobacco substitutes and essential oils; persons without Aadhaar authentication under rule 10B (notification No. 14/2025–Central Tax dated 17.09.2025); and cases where DRC-01 is issued against an RFD-06, APL-03 is filed without APL-04, or APL-07 is filed against an appellate order and APL-04 is yet to be issued. |
| Inverted duty on notified goods | No refund for goods notified under notification No. 5/2017–Central Tax (Rate) dated 28.06.2017, as amended. Section 54(10) and (11) withholding continues. |
| Returns pending? | All returns due on or before the date of the refund application must be filed. |
| Interest on delay | Interest under section 56 for the period of delay beyond 60 days. Where a refund withheld under section 54(11) later becomes due, interest at 6% from the date of withholding until actual payment. |
| Minimum refund | The ₹1,000 threshold applies to the total refund across all tax heads taken together. It does not apply to refund on goods exported with payment of tax. |
| Documents | No physical submission to the jurisdictional officer. No need to upload invoices (para 36 of Circular No. 125/44/2019-GST dated 18.11.2019). Details earlier uploaded as scanned documents will be captured within the application. |
| Export verification (Phase II) | Integration with ICEGATE (shipping bills), RBI’s EDPMS (export proceeds of services) and SEZ Online. |
| Rule 89(4)(C) | The condition valuing zero-rated goods at 1.5 times the value of like goods supplied domestically is to be removed. |
Practitioner’s view: automation is risk-based. The FAQs themselves advise that data in the refund application must match the returns and documents such as shipping bills, that ITC blocked under section 17(5) must be excluded, and that reversals under rules 42 and 43 must be made. Claims with return mismatches should be expected to be routed to an officer. Risk: Moderate for exporters with unreconciled GSTR-1, GSTR-3B and GSTR-2B data.
3. Refund of ITC on input services and capital goods
Under rule 89 today, “Net ITC” excludes ITC on capital goods (zero-rated supplies) and on both input services and capital goods (inverted duty structure). The Council has recommended including:
- ITC on input services availed on or after 01.11.2026 in refund on account of inverted duty structure (rule 89(5)); and
- ITC on capital goods availed on or after 01.04.2027, to the extent attributable to the relevant period, in refund on account of zero-rated supplies without payment of tax (rule 89(4)) and inverted duty structure (rule 89(5)).
| Question | FAQ answer |
|---|---|
| Does a higher input service rate create an inverted duty structure? | No. Inversion is still determined by comparing the rate on inputs with the rate on output supplies. Only where inversion is established is ITC on eligible input services included. The proposal does not expand the class of persons eligible under the first proviso to section 54(3)(ii). |
| Illustration (Case A / Case B) | Case A: inputs at 18%, output at 5%, input services at 18% – inversion exists; ITC on input services availed on/after 01.11.2026 is included. Case B: inputs 5%, output 5%, input services 18% – no inversion, so no refund merely because input services carry a higher rate. |
| Which refunds consider capital goods ITC? | Zero-rated supplies without payment of tax (bond/LUT) and inverted duty structure. Zero-rated supplies on payment of IGST are unaffected. |
| Entire capital goods ITC in the month availed? | No. It is considered in equal proportion over 60 months, one-sixtieth per month, starting from the month of availment. |
| Which capital goods ITC counts for a period? | ITC availed on/after 01.04.2027 in any month not earlier than 59 months from the last month of the relevant period, computed by the rule 89 formula. |
| Which ITC is excluded? | ITC blocked under section 17(5) or otherwise inadmissible, and reversals including under rule 43 attributable to the months in the period. |
4. Show cause notices and penalty: litigation reforms
The ₹10,000 minimum threshold for notices under sections 73, 74 and 74A
- If the tax (including applicable cess) is exactly ₹10,000, the threshold is met and a notice may be issued.
- The threshold is tested on the aggregate of CGST, SGST/UTGST, IGST and cess. Each head need not independently reach ₹10,000.
- Interest, late fee and penalty are not counted.
- Tax on ITC wrongly availed or utilised is counted, with amounts under different heads aggregated.
“Penalty” becomes “charge” on voluntary payment
The substitution of “penalty” with “charge” does not change the amount payable. To obtain conclusion of proceedings, the noticee pays the tax, applicable interest and the prescribed reduced amount within the specified time; the amount is then referred to as a “charge” and is deposited under the head “Others”.
Litigation lens: the FAQs speak only of future notices. How the threshold treats notices already issued, and orders already passed below ₹10,000, depends on the final amendment and any savings clause, which the FAQs do not address. Position requires verification once the law is notified. Risk: Moderate. Until then, replies and appeals should be filed within the existing limitation periods. For the appeal route, see our guides on appeals under GST and the GSTAT appeal process.
5. Arrest and prosecution under GST
| Question | FAQ answer |
|---|---|
| Can anyone be arrested after the amendment? | No. The arrest provisions are proposed to be removed. Prosecution may still be launched before the competent Court on a complaint by the tax authorities where the amount involved exceeds ₹5 crore. |
| Prosecution threshold | Section 132(1) offences: where evaded tax exceeds ₹5 crore, against ₹1 crore at present. |
| Punishment on conviction | Above ₹10 crore: imprisonment up to five years, or fine, or both. Above ₹5 crore up to ₹10 crore: imprisonment up to two years, or fine, or both. |
| Is imprisonment compulsory? | No. “Imprisonment and fine” becomes “imprisonment or fine or both”, and the minimum imprisonment of six months under section 132(3) is removed. |
| Offences omitted or narrowed | Clause (i) of section 132(1) (supply of services in contravention of the Act) omitted; “evades tax” omitted from clause (e), confining it to fraudulently obtaining refund; “or in any other manner deals with” omitted from clause (h). |
Practitioner’s view: removal of arrest and a higher prosecution threshold change the risk profile of investigations, but they do not reduce the tax, interest and penalty exposure. Departmental summons, search and recovery powers are not addressed in the FAQs. Until the Act is amended, section 69 and the existing section 132 continue to apply. Risk: High if clients assume the benefit has already commenced.
6. E-way bill: who can stop your truck?
- No random checks. A conveyance may be intercepted only on the written authorisation of a proper officer not below the rank of Joint Commissioner who has reasons to believe, recorded in writing, that the goods are being transported in contravention of the Act or Rules.
- Only the supplier’s or recipient’s State. Inspection, detention or seizure under section 129 may be done only by an officer of the State or Union territory where either the supplier or the recipient is located. Transit States cannot do so. In the FAQs’ illustration, goods move from State A to State B through State C: officers of A or B may act; officers of C may not.
- Transit State officers who notice a contravention must allow the vehicle to pass and transmit the information to the officer having jurisdiction over the supplier or recipient.
- Exception. Where no e-way bill has been generated or the person in charge is not carrying the prescribed documents, an authorised officer may inspect, detain or seize under section 129 even where neither party is located in his State.
- No confiscation in transit. Section 130 will apply only to cases other than goods in transit. Goods and conveyances in transit are dealt with only under section 129 read with section 68.
For the detailed analysis, read E-Way Bill Interception: Which State Can Stop Your Truck?
7. Export of services: place of supply
Under section 13(3)(a) of the IGST Act, 2017, for services requiring goods to be made physically available to the supplier in India (for example testing, repair, R&D, clinical trials), the place of supply is where the services are performed, i.e. in India. This denies export/zero-rating even where the recipient is abroad and payment is received in foreign exchange. Omitting clause (a) brings such services under the default rule of section 13(2): place of supply is the location of the recipient.
8. Goods: classification and rate clarifications
The FAQs on goods carry the Government’s own disclaimer that the answers are for educational and guidance purposes and have no legal validity; the notifications and circulars govern.
| Item | FAQ position |
|---|---|
| Sea-weed extract bio-stimulants | Classifiable under heading 3101 as fertilisers if registered under Schedule VI of the Fertiliser (Inorganic, Organic or Mixed) (Control) Order, 1985 (S. No. 237 of Schedule I, notification No. 9/2025–Central Tax (Rate), 17.09.2025). Products containing Plant Growth Regulators do not qualify. Past cases regularised on an “as is where is” basis. |
| Toys | Entries (S. No. 497 of Schedule I and S. No. 616 of Schedule II) cover all toys under heading 9503, not only tricycles, pedal cars and scooters. |
| Second-hand cars (margin scheme) | Concessional rate is not lost if ITC is availed on repairs, spares and other inputs and input services. ITC on tax paid on purchase of second-hand vehicles cannot be availed. |
| Sublimation paper | Classifiable under heading 4809 (S. No. 176 of Schedule II). Past period regularised “as is where is”. |
| Retreaded tractor tyres | Rate aligned with new tractor tyres. |
| Psyllium seeds (Isabgol) | Separate entry at Nil rate (notification No. 10/2025–Central Tax (Rate)), whether fresh, chilled, frozen or dried. |
TDS and RCM on specified scrap and used cooking oil
For waste and scrap of plastics, tyres, electrical and electronic waste and scrap, and used cooking oil, the Council recommended a framework on the lines of the existing metal scrap mechanism:
- TDS at 2% under section 51 where a registered person supplies to a registered person. The buyer deducts, deposits and files FORM GSTR-7, and issues a TDS certificate.
- Reverse charge (RCM) where an unregistered person supplies to a registered person. The recipient pays GST even if the supplier is below the registration threshold. The supplier must register once the section 22 threshold is crossed.
9. Services: exemptions and rate clarifications
| Topic | FAQ position |
|---|---|
| Helicopter seat-sharing | Exemption in addition to the existing economy-class air travel exemption for specified airports; chartered helicopter services excluded; helipads covered as “aerodromes” under the Bharatiya Vayuyan Adhiniyam, 2024. |
| Foreign shipping lines | Exemption only for import of services from the overseas head office/establishment to the Indian establishment without consideration. “Foreign company” has the meaning in section 2(42) of the Companies Act, 2013. Past period regularised on an “as is where is” basis; no refund where GST was paid. |
| Electric vehicle passenger transport and rental with operator | Rate options aligned with conventional vehicles where cost of battery charging is included in the consideration. Leasing without operator is unchanged. |
| Vehicle leasing recoveries | Registration charges, road tax, insurance, FASTag and similar recoveries form part of the composite supply of leasing and take the leasing rate. |
| GTA and delivery through ECOs | GTA transport of goods supplied/ordered through an ECO: 5% without ITC or 18% with ITC; Entry 21A exemption unavailable; ECO not liable under section 9(5) for such GTA service. Delivery services in relation to such goods: 5% without ITC. Individual truck owners and transport of goods not ordered through an ECO are unaffected. |
| Toll rights (TOT model) | Exemption for grant of exclusive rights to collect toll, for upfront and periodic payments, only where granted by Government, local or governmental authority or entity. O&M services valued under section 148 on actual expenditure debited from the Escrow Account. |
| ITC for resellers of 5% services | Limited ITC for same-category input service for hotel accommodation up to ₹7,500 per unit per day, restaurant and outdoor catering, and gym/fitness services. Not a general release of ITC on all 5% services. |
| Seamen’s Provident Fund Organisation | Exemption on the lines of EPFO and CMPFO. |
| R&D services | Certificate from the head of the eligible institution notified under section 35(1)(ii) or (iii) of the Income Tax Act, 1961 that the work is R&D and not consultancy. No prescribed format; kept on record and produced when sought in scrutiny, audit or investigation; not filed with returns. |
| Coffee curing | Exemption for curing services to coffee cultivators, at the estate or a curing works. Roasting and other processing not covered. |
| Storage of seeds | Exemption for storage or warehousing of seeds meant for sowing, not limited to agricultural crops. |
What the FAQs do not tell you
- Effective dates for most reforms (registration, refund phases, litigation, prosecution, e-way bill). Only the 01.11.2026 and 01.04.2027 ITC dates are stated.
- Transition for pending matters. Treatment of notices, appeals, refund applications and investigations already in progress.
- Final drafting. The FAQs are explanatory; the Act, Rules, notifications and circulars will control, and may differ.
What should businesses do now?
- Continue under existing law. Do not take refund, ITC or litigation positions based on the FAQs alone.
- Exporters and inverted duty claimants: track ITC on input services availed from 01.11.2026 and maintain an asset-wise register for capital goods ITC from 01.04.2027.
- Reconcile GSTR-1, GSTR-3B and GSTR-2B before filing refund applications; mismatches are likely to trigger officer scrutiny.
- Review pending notices and appeals for the ₹10,000 threshold, but file replies and appeals within limitation.
- Transporters: carry the e-way bill and invoice or delivery challan at all times; the transit-State protection depends on valid documents.
- Review registrations for rule 14A/14B options and for cancellation or revocation timelines.
Frequently asked questions
Are the 57th GST Council FAQs legally binding?
No. They explain Council recommendations. The reforms take effect only through amendments to the Acts and Rules, notifications and circulars. The goods section of the FAQs states expressly that the answers have no legal validity.
When is the refund of ITC on input services available?
For ITC on input services availed on or after 1 November 2026, in refund on account of inverted duty structure, once the law is amended. ITC on capital goods qualifies from 1 April 2027, spread over 60 months.
Has the power of arrest under GST been abolished?
It has been recommended for removal. Until the CGST Act is amended, the existing provisions apply. Prosecution would remain possible where the amount exceeds ₹5 crore.
Is a show cause notice valid if the tax is below ₹10,000?
The recommendation is that no notice be issued below ₹10,000 of tax, aggregated across CGST, SGST/UTGST, IGST and cess. The treatment of existing notices depends on the final amendment.
Can a transit State stop my goods after the amendment?
Not for inspection, detention or seizure where an e-way bill and prescribed documents are in order; action is limited to the State of the supplier or recipient. Where no e-way bill or documents are carried, any authorised officer may act under section 129.
Does deemed acknowledgement of a refund mean the refund is sanctioned?
No. It only starts the processing timeline. Processing follows the risk-based framework.
Sources
- GST Council, “FAQs on recommendations of GST Council made in its 57th meeting on 08.10.2026” – GST Council – What’s New.
- Implementing notifications and circulars will be uploaded on taxinformation.cbic.gov.in.
- Related reading: 57th GST Council Meeting Highlights.
This article is for general information and educational purposes only. It is based on the FAQs released by the GST Council on the recommendations of its 57th meeting and does not constitute professional advice or a solicitation. Readers should refer to the relevant law as amended and seek professional advice on their specific facts.
Arpan Bohra & Co., Chartered Accountants
Himayat Nagar, Hyderabad, Telangana
9010558981 | office@arpanbohra.co.in | www.arpanbohra.co.in