GST Council Meeting on Wednesday; Small Businesses May Get Major Relief

The GST Council is set to meet on October 7, where it may discuss changes to several key rules affecting businesses and taxpayers. A key proposal on the agenda could revoke the arrest powers currently held by GST officials.

The 57th meeting of the GST Council is scheduled for Wednesday, October 7, 2026. Discussions will focus on major changes to tax-related rules and procedures. The objectives include simplifying tax processes for businesses, allowing small e-commerce sellers to use platform warehouses for GST registration, safeguarding Input Tax Credit (ITC) for genuine buyers, and reducing legal disputes arising from low-value cases.

These proposals, introduced as part of the ‘GST 2.0’ process improvements, aim to streamline registration and return filing while minimizing disputes between taxpayers and the tax department. Let us look at some of the key reforms on the meeting’s agenda:

Revoking Arrest Powers of GST Officials

A new proposal is in the works to amend Section 69 of the CGST Act. Previously, officials could make direct arrests with approval from the Commissioner-level authority; however, under the proposed changes, arrests—even in cases of serious fraud—would not be possible without a court order. In other words, prior court approval could become mandatory for the arrest of a businessperson.

Raising the Threshold for Criminal Proceedings

Currently, the minimum threshold for initiating criminal prosecution under GST laws is ₹1 crore. This means criminal action can be taken in certain serious GST-related cases where the amount involved exceeds ₹1 crore. In Wednesday’s meeting, the Law Committee is considering raising this tax evasion threshold for criminal prosecution to ₹5 crore. However, even with this new limit, there is no scope for relief in cases involving fake invoices (generating bills without the actual supply of goods).

No arrests for routine tax disputes

Traders and tax officials may hold differing views regarding tax rates, product categories, or Input Tax Credit (ITC) because tax laws are complex enough for the same rule to be interpreted differently by different people. Unless deliberate tax evasion or fraud is proven, the issue will not be treated as a criminal offense; such routine tax disputes will be kept outside the ambit of criminal proceedings.

Major relief for small e-commerce sellers

There is another proposal aimed at simplifying GST registration for small businesses selling goods online. Under this, traders can use the warehouses of e-commerce platforms like Amazon and Flipkart as their registered business address. This rule will completely eliminate the maintenance costs—such as renting separate shops or offices, paying hefty security deposits, and hiring staff—that small businesses (numbering around 9.5 lakh) currently incur in every state where they supply goods.

Protection of ITC for genuine buyers

Often, traders lose their Input Tax Credit (ITC) after purchasing goods and paying the full tax amount out of pocket, simply because the upstream supplier fails to remit the tax to the government. Under the new rule, if the buyer possesses a valid invoice, their ITC will remain secure, and the government will recover the dues directly from the defaulting supplier.

No notices for demands below ₹10,000

To reduce litigation in courts and before authorities, consideration is being given to not issuing notices for tax demands of less than ₹10,000, as such cases account for approximately 20% of all tax disputes. Additionally, an amnesty scheme to waive late fees for small taxpayers and make penalties more practical could also be discussed.