GST Council To Consider Lower Penalties, Easier Refunds, And Simplified Registration On Oct 7

The Council may consider reducing the general penalty applicable to taxpayers from Rs 25,000 to Rs 10,000, according to media reports.

It is also expected to examine changes to penalties in cases that do not involve fraud, wilful misstatement or suppression of facts to evade tax.

Source : IANS

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Key points generated by AI, verified by newsroom

• GST Council meeting to discuss compliance, procedural changes.
• Proposals include reduced penalties and simplified registration processes.
• Small taxpayers gain late fee waivers; ITC discussed.

The Goods and Services Tax (GST) Council is expected to consider a series of compliance and procedural changes at its October 7 meeting, including lower penalties, simpler registration norms, easier refunds and measures to reduce disputes over input tax credit (ITC), according to official sources.

The proposed reforms are aimed at simplifying the process of complying with GST requirements for businesses and taxpayers. The Council may also consider a minimum threshold for issuing show-cause notices, changes to late fees for small taxpayers and a simplified registration mechanism for small sellers operating on e-commerce platforms, reported The Financial Express.

Finance Minister Nirmala Sitharaman had said earlier this month that the upcoming meeting would focus “only on process reforms”.

The proposed changes follow the GST rate rationalisation implemented in September 2025, when the Council moved from four primary tax slabs to a two-tier structure.

GST Council May Reduce General Penalties, Set Notice Threshold

The Council may consider reducing the general penalty applicable to taxpayers from Rs 25,000 to Rs 10,000, according to official sources.

It is also expected to examine changes to penalties in cases that do not involve fraud, wilful misstatement or suppression of facts to evade tax.

Under the proposal, penalties in such cases could be capped at 10% of the tax amount, with the minimum penalty requirement removed, sources said.

Another proposal involves introducing a minimum threshold of Rs 5,000 for issuing show-cause notices under Sections 73 and 74 of the Central Goods and Services Tax (CGST) Act.

The Council may also consider measures to address cases in which recipients lose input tax credit because suppliers delay furnishing details of the underlying invoice or debit note.

Registration Process May Become Simpler For Businesses

The GST Council is expected to take up recommendations from its Law Committee on streamlining registration procedures and reducing delays.

The committee has recommended a comprehensive circular clarifying the information required in GST registration applications. The move is intended to provide consistent guidance, remove ambiguity and reduce avoidable processing delays.

Guidelines for field officers may also be considered to ensure uniformity across jurisdictions and speed up the processing of applications, sources said.

The Council may approve automated acceptance of amendments to registration details through the GST common portal, except where the changes concern the address of the principal place of business.

A simpler procedure for cancellation of GST registration is also expected to be considered.

In addition, the Council may examine a simplified registration mechanism for small sellers operating through e-commerce platforms.

Small Taxpayers May Get Relief From Late Filing Fees

The Council may consider waiving late fees for certain small taxpayers who file delayed returns within a specified period.

The proposal applies to taxpayers whose aggregate turnover was below Rs 5 crore in the preceding financial year.

Under the proposed conditions, the late fee could be waived if the taxpayer furnishes the return on or before the last day of the month in which the return is due.

The measure is among the compliance-related proposals expected to be discussed at the October 7 meeting.

Changes Proposed To Reduce Input Tax Credit Mismatches

The Council may consider an alternative mechanism for amending tax liabilities and input tax credit in returns to minimise mismatches and reduce the issuance of notices and intimations.

Measures to facilitate the accurate reporting of tax liability and ITC details in Form GSTR-3B are also expected to be taken up.

The proposals could include improvements to the user interface for filing GST returns, the report said citing sources.

The Law Committee has also recommended amending Section 18 of the CGST Act to provide a mechanism for availing and reversing input tax credit on relevant inputs and capital goods held in stock on the date of transition, in cases involving a transition from one category or status to another.

The Council is expected to consider this recommendation.

Another proposal involves extending e-invoicing to domestic supplies received from unregistered persons where tax is payable under the reverse charge mechanism. This would also cover the import of services, the report said.

IPR Transfers, Metro Rail E-Way Bills On Agenda

The Council may consider treating the permanent transfer of intellectual property rights (IPR) as a supply of services under GST.

At present, the provision is limited to temporary transfers or licensing of intellectual property rights, according to the information provided by official sources.

The proposed change would extend the treatment to permanent transfers as well.

The Council may also consider including Metro Rail systems within the framework for e-way bill generation.

GST Rate Rationalisation Came Into Effect In September 2025

The proposed process reforms come more than a year after the GST Council approved changes to the indirect tax structure.

At its September 3, 2025 meeting, the Council merged the four primary GST slabs of 5%, 12%, 18% and 28% into two main rates of 5% and 18%, while introducing a 40% rate for ultra-luxury and sin goods.

The revised rates came into effect on September 22, 2025.

While the earlier changes focused on tax rates, the October 7 meeting is expected to concentrate on compliance procedures, registration, refunds, penalties and input tax credit-related issues.

The proposals are subject to consideration and approval by the GST Council at its upcoming meeting.