Full Breakdown
GST Council poised to roll out “GST 2.0” reforms aimed at de-criminalising the tax, unlocking credit and speeding refunds
By Drooid · · How we work
Core Event – Oct 7 GST Council meeting to consider sweeping process reforms
The GST Council will meet on October 7 to discuss reforms that would:
- Remove GST officials’ power to arrest under Section 69 and raise the criminal-prosecution threshold from INR1 cr to INR5 cr.
- Let genuine buyers keep input tax credit (ITC) even if an upstream supplier defaults, with recovery pursued against the defaulting seller.
- Extend ITC to health and life-insurance for employees, outdoor catering, telecom towers, pipelines outside factories, free samples, expired goods and vehicles up to 13 seats.
- Launch a single-application, multi-state registration system that auto-populates details and assigns jurisdiction.
- Acknowledge refund claims within 10 days and automatically release 90 % of low-risk refunds.
- Bar GST demand notices for amounts below INR10,000, which represent about 20 % of cases.
- Allow small e-commerce sellers to use the platform’s warehouse as their registered address, covering roughly 9.5 lakh sellers.
These steps aim to shift GST toward a data-driven, risk-based regime.
Background & Context
GST was introduced in July 2017. “GST 2.0” follows the September 2025 rate rationalisation that reduced slabs to 5 % and 18 %.
Timeline
| Date | Event |
|---|---|
| Sept 2025 | Rate rationalisation to 5 % and 18 % slabs. |
| Nov 1 2025 | Simplified registration for small, low-risk businesses. |
| Oct 5 2026 | Media reports detail the reform package. |
| Oct 7 2026 | GST Council meeting to consider proposals. |
Data & Statistics
- 1.68 cr businesses are registered; 61 % use the three-day automatic route.
- About 95,000 GST notices are issued yearly, recovering only 0.08 % of the amounts involved.
- The INR10,000 notice threshold covers roughly 20 % of disputes.
- 66 % of change-of-registration applications involve name, director or address updates, about 10.5 lakh requests annually.
- GST collections in Sept 2026 hit INR2,03,521 cr, a 14.7 % YoY rise (Vivek Jalan, Tax Connect).
- The multi-state registration system could aid 9.5 lakh small e-commerce sellers.
Official Statements & Responses
The official noted that the invoice-matching system now links buyer and seller data invoice-by-invoice, supporting ITC protection. He added that GSTN holds the full value-chain data, enabling targeted fraud detection.
Bipin Sapra, EY partner, said the reforms “can lower costs across industry and make Indian goods and services more competitive globally.”
Verbatim Quotes
- “Unlocking blocked input tax credit under Section 17(5) can lower costs across industry and make Indian goods and services more competitive globally,” — Bipin Sapra, EY
Conflicting Reports & Gaps
Sources describe the proposals uniformly; the implementation timeline after council approval remains unclear.
What’s Next
If approved on Oct 7, the council will roll out the multi-state registration interface and the low-value notice exemption first, followed by the 10-day refund acknowledgment and 90 % auto-approval of low-risk refunds. Later phases will address de-criminalisation, ITC expansion and e-commerce warehouse registration, with full implementation expected within the next fiscal year.