Source : INDIA TODAY NEWS
The 57th GST Council meeting, chaired by Union Finance Minister Nirmala Sitharaman, concluded in New Delhi on Thursday with the Council approving a series of enforcement and procedural reforms, according to government sources, as reported by Chetan Bhutani.
With the rate structure settled, the focus is now shifting to how GST works on a day-to-day basis. The reforms cover areas such as litigation, input tax credit, registration, returns and refunds, with the aim of making compliance simpler for businesses.
advertisement
WHY PROCESS REFORMS NOW?
For a business, GST-related processes such as registration, filing returns and claiming refunds are far more frequent than changes in tax rates. This is why the Council has now turned its attention to making these processes easier and more efficient.
The GST system also matches what a seller reports with what a buyer claims, invoice by invoice. Network analysis is used to identify fake credit close to where it is created.
Over the past year, three National Coordination Meetings of Central and State officers were held, along with several meetings of a smaller group of officers. The proposals were discussed with states before being placed before the GST Council.
ONE STANDARD FOR GST LITIGATION
The Council has proposed a common standard for how a GST notice is issued and served, how a pre-notice intimation is given, when fraud can be alleged, how a hearing is conducted and how an order is written.
No notice will be issued for cases involving an amount below Rs 10,000.
INPUT TAX CREDIT: RELIEF FOR GENUINE BUYERS
A Committee of Officers will examine whether a genuine buyer who has a proper invoice, has received the goods and has paid the supplier in full can be protected from losing input tax credit.
The committee will complete its study within three months, after which an agenda will be placed before the next GST Council meeting.
The Council has also approved changes to allow input tax credit on health and life insurance taken for employees. Credit will also be available on telecommunication towers and pipelines laid outside a factory.
Input tax credit will also be available on free samples and on stock written off after expiry where the law requires the goods to be destroyed.
NO DOUBLE TAXATION ON CERTAIN SERVICES
A service bought and sold again in the same line of business will carry tax once instead of twice.
This will cover common cases such as hotel accommodation costing up to Rs 7,500 a night when booked through an agent, restaurant and catering services, and passenger transport.
Credit was earlier denied in these cases because the applicable rate was 5% without credit. The credit chain will now continue.
REFUNDS TO COVER INPUT SERVICES AND MACHINERY
Businesses with an inverted rate structure, where inputs are taxed at a higher rate than the output, were earlier allowed refunds only for goods. Tax paid on input services will now also be included.
This will apply to credit availed on or after November 1, 2026.
Tax paid on plant and machinery was earlier excluded from refunds for exporters as well as businesses with an inverted rate structure. This exclusion will now be removed.
Refund on plant and machinery will be calculated at one-sixtieth of the credit for each month, in line with the working life of the asset. This will apply to credit availed on or after April 1, 2027.
The change is expected to help manufacturers recover tax paid on new investments instead of leaving it unused in the credit pool, supporting working capital management in sectors such as pharma and FMCG.
GST REGISTRATION TO BECOME EASIER
GST registration is currently granted within three working days through an automated system for low-risk applicants and those whose output tax on supplies to registered persons does not exceed Rs 2.5 lakh a month.
Around 61% of registrations already come through this automated route, while the remaining 39% are sent to an officer.
The application form will also be changed to guide applicants, show only relevant fields and explain the purpose of each document.
Between November 2025 and September 2026, 16.73 lakh applications were filed to amend registrations. Of these, 10.95 lakh, or 65.45%, related to changes such as trade names, directors or partners, or the address of an additional place of business. These changes will now be accepted automatically.
EASIER PROCESS FOR CLOSING A BUSINESS
The closure of GST registrations will be automated in stages, beginning with smaller taxpayers.
Around 90% of taxpayers seeking cancellation have never passed on input tax credit of more than Rs 2.5 lakh in any month, indicating low revenue risk.
The final return will also become part of the closure application instead of being a separate step.
Where a registration has been suspended or cancelled because of a missing return or bank details, the system will restore it once the taxpayer completes the required step.
FEWER NOTICES FOR RETURN DIFFERENCES
Around 95,000 system-generated notices are issued every year over differences between returns. Recovery against these notices is about 0.08% of the amount involved, with most cases linked to data entry issues.
Under the new process, a seller reducing something already reported will make the change in the sales statement. This will allow the change to reach the buyer who has claimed credit on it.
Corrections will also be allowed for earlier periods, including cases where a buyer’s GST registration number was entered incorrectly.
Input tax credit will be settled through the Invoice Management System, with the buyer’s accepted amount flowing into the return.
GST REFUNDS TO BE PROCESSED FASTER
The time taken to acknowledge a refund claim will be reduced from 15 days to 10 days. If neither an acknowledgement nor a deficiency memo is issued within 10 days, the claim will be treated as acknowledged.
The system, rather than an officer, will sanction 90% of the claim based on risk assessment. The order will be issued within three working days of acknowledgement, compared with seven days at present.
Refund of an excess balance in the cash ledger will also become fully automatic, without officer involvement.
Of all refund claims, 65% relate to exports or an inverted rate structure, while 55% of these are already rated low risk. Another 19% are balances lying in the cash ledger, which is money already with the government.
The refund claim form will also carry the required details, with shipping information drawn from customs and payment details taken from the banking system.
– Ends
SOURCE :- TIMES OF INDIA
