New Delhi: The Centre plans to review the implementation of the latest Goods and Services Tax (GST) procedural reforms with states in three months to identify gaps and ensure the necessary changes are in place by April next year, a top government official said on Monday.
The aims to complete all necessary changes well before the proposed implementation date of 1 April 2027, including legislative amendments and measures that can be introduced through executive orders, the official said, requesting anonymity. While some changes will require parliamentary approval, others can be implemented through administrative orders or amendments to rules and procedures. With all states on board, the government is confident of completing the exercise within the stipulated timeframe, the official added.
The review will assess whether the reforms recommended by the GST Council are being implemented effectively and delivering their intended benefits to businesses. Among the key proposals is the removal of GST officers’ arrest powers, alongside measures to simplify procedures, standardise tax administration and reduce litigation.
The decision to remove arrest powers is aimed at building confidence among businesses and encouraging greater voluntary compliance, the official said. The ultimate objective of the administration is to collect taxes, and a trust-based approach can encourage businesses to file their returns and meet their tax obligations, the official added.
The review assumes significance as the 57th GST Council meeting last week recommended a series of measures to speed up refunds, widen input tax credit (ITC) eligibility and reduce compliance burdens. The Council recommended automatic refunds of excess balances in electronic cash ledgers and provisional system-based sanctioning of 90% of eligible refund claims relating to zero-rated supplies and inverted duty structures, subject to risk assessment. The time limit for issuing an acknowledgement or deficiency memo for refund applications is also proposed to be reduced from 15 days to 10 days.
Queries sent to the spokesperson of ministry of finance remained unanswered till press time.
Experts said simpler compliance procedures could bring more businesses into the GST net.
“Easier registration, particularly for small and e-commerce businesses, combined with simpler compliance, can draw more enterprises into the formal tax net. Wider credits and faster refunds may have a near-term revenue cost, but a broader taxpayer base, better compliance and higher economic activity should support more sustainable GST collections,” said Nitin Vijaivergia, partner at Price Waterhouse & Co LLP.
The GST Council also recommended allowing refunds of accumulated ITC on input services under the inverted duty structure for credit availed from 1 November 2026. Refunds of eligible ITC on capital goods for zero-rated supplies and inverted duty cases are proposed to be allowed over 60 months for credit availed from 1 April 2027.
Thefurther recommended widening ITC eligibility for specified expenses, including outdoor catering, health and life insurance, telecommunications towers and pipelines outside factory premises. These changes are intended to reduce embedded taxes and ease working capital pressures on businesses.
The procedural reforms are aimed at bringing more businesses into the GST system, encouraging voluntary compliance and improving tax collections. The government intends to adopt a more trust-based approach towards taxpayers, while cases involving fraud or other GST violations will continue to be dealt with under the applicable legal provisions, the official said.
The government also plans to significantly increase the share of GST refunds processed under the zero-risk category through system-driven checks from the current 60%, aiming to reduce manual intervention and speeding up refunds to eligible taxpayers, the official cited earlier said. Although some refunds are already processed within three days, the government is looking to reduce the processing time further, the official added.
The GST Council has also recommended amendments to Sections 73, 74 and 74A of the Central GST Act, 2017, to deem the penalty amount as a ‘charge’ in specified cases where taxpayers voluntarily pay the full tax amount, along with applicable interest and penalty, within the prescribed time limit. The proposal is intended to reduce the stigma associated with penalties and help simplify dispute resolution.
The Council has further recommended reducing the penalty to 5% in non-fraud cases where tax and interest are paid within 30 days of the adjudication order under Section 73 or within 60 days under Section 74A. It has also recommended removing the minimum penalty of ₹10,000 in non-fraud cases. These measures form part of a broader effort to reduce litigation and encourage timely compliance.
India’s GST collections rose 14.7% in September to ₹2.04 trillion from ₹1.77 trillion a year earlier. September was the third month this fiscal year in which GST collections crossed the ₹2 trillion mark, but were below the ₹2.11 trillion collected in July, when the monthly mop-up crossed ₹2 trillion for the second time. July’s collection was the second-highest since GST was introduced in July 2017, after the record ₹2.43 trillion collected in April 2026.