GST Council approves reforms for registration, returns, refunds, and enforcement
What's the story
The 57th Goods and Services Tax (GST) Council has approved a series of process reforms aimed at simplifying registration, returns, refunds, and enforcement. The focus of these reforms is on improving the day-to-day functioning of the GST system for businesses rather than just tax rates. Finance Minister Nirmala Sitharaman announced that all GST process reforms will come into effect from April 1, 2027.
Enhanced detection
Network analysis identifies potentially fake input tax credits
The GST system now matches seller reports with buyer claims, invoice by invoice.
It also uses network analysis to identify potentially fake input tax credits closer to where it is created.
The Council has now automated more routine and low-risk processes, making compliance easier for small taxpayers, exporters, and businesses regularly transporting goods across states.
Streamlined process
Registration granted within 3 working days
GST registration is now granted within three working days without officer intervention for low-risk applicants.
The registration application form will be simplified, showing only relevant fields to applicants.
Routine amendments to registrations such as changes in trade name or director/partner details will be accepted automatically.
This is expected to ease compliance requirements for consumer-facing businesses with a turnover of up to ₹5 crore.
Improved efficiency
Council streamlines return reconciliation process
The Council will also streamline return reconciliation, which currently generates around 95,000 system-generated notices annually over differences between returns.
Sellers reducing an amount already reported will now reflect the change in their sales statement.
Corrections for earlier periods and wrongly entered buyer registration numbers will also be allowed.
Credit will be settled through the Invoice Management System, with what the buyer accepts flowing into the return.
Enhanced convenience
Acknowledgement period for refund claims reduced to 10 days
The acknowledgement period for refund claims will be reduced from 15 days to 10 days.
If no acknowledgment or deficiency memo is issued within this period, the claim will be considered acknowledged.
The system will sanction 90% of refund claims based on risk assessment, with orders issued within three working days of acknowledgment.
Goods in transit can only be stopped on specific intelligence and prior authorization from a Joint Commissioner-rank officer.
Tax relief
Optional scheme for taxpayers with turnover up to ₹5 crore
An optional scheme has been approved in principle for taxpayers with a turnover of up to ₹5 crore who supply only to consumers.
Under this, they would file a return once a year and pay tax quarterly.
The Council also announced that the power of arrest is being removed from GST, while the prosecution threshold will be raised from ₹1 crore to ₹5 crore.