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The 57th GST Council meeting happened on 8th October 2026 and focused mainly on GST process reform: GST returns, refunds, registration, disputes, and enforcement. It also included selected recommendations on rates and the treatment of goods and services. Each update still needs the relevant law amendments, rules, notifications, or circulars. Portal functionality may also require a separate production rollout. Enterprises must check the relevant legal provisions and effective date before changing workflows for return filing, Input Tax Credit (ITC) claims, refund forecasts, or legal standing in the tax notices.
For finance leaders, the first step is to separate a potential cash benefit from a claim you can make under the law today. The table below explains the Council proposals and the future impact for finance teams:
| At a glance | What the Council proposed |
| 90% provisional refund | A system-issued provisional order will be issued within 3 working days of acknowledgement for eligible low-risk zero-rated and inverted duty claims. This is subject to the proposed framework. |
| Rs 5 crore | Raising the prosecution threshold from Rs 1 cr to Rs 5 cr, along with a proposal to omit Section 69 arrest powers. |
| April 2027 return | The proposed return correction mechanism may start with the April 2027 return period, after consultation and implementation. |
| Section 17(5) | Relaxing restrictions for specified expenditure such as insurance, catering, sample, tower, pipeline, or expired-stock expense, subject to a legislative amendment and ordinary ITC conditions. |
Note: These are Council recommendations, not changes in force.
Here are some of the recommendations most relevant to large enterprises.
| Refund processing could become more automated | The Council proposed automatic sanctioning of excess electronic cash ledger refunds. For eligible low-risk zero-rated and inverted duty claims, the proposal provides for a system to issue a provisional order for 90% of the claim. The proposed order is due within three working days of acknowledgement; final processing is separate. |
More ITC inclusion in the inverted duty refund calculations:
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| Easing the blocked credit u/s Section 17(5) | The Council proposed changes to blocked ITC affecting outdoor catering; health and life insurance; telecom towers; pipelines outside factory premises; free samples; and certain goods destroyed or written off on expiry where the law requires destruction.
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| Changes to the export treatment: | The Council proposed changes affecting certain services supplied to or through foreign branches, specified Place of Supply (PoS) cases, and goods delivered to an overseas buyer in a Special Economic Zone (SEZ) or Free Trade Warehousing Zone (FTWZ). It also proposed removing the 1.5 times the like goods valuation restriction in the zero-rated goods refund formula.
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| Amending arrest and prosecution provisions | The Council recommended omitting Section 69, increasing the prosecution threshold from Rs 1 cr to Rs 5 cr, and changing specified Section 132 offences. |
| Threshold for smaller notices | The Council proposed a Rs 10,000 threshold to issue tax notices. The amount will be calculated at an aggregate of tax and cess under Sections 73, 74, and 74A. However, Interest, late fees, and penalties will not be considered while calculating the threshold. Pending notices would be considered under the corresponding provision once it takes effect; they do not close automatically today. |
| Non-fraud cases might attract a 5% penalty | The proposal requires payment of tax and interest within 30 days of the adjudication order under Section 73, or 60 days under Section 74A. Further, the Council separately proposed reducing the maximum general penalty under Section 125 from 25,000 to Rs 10,000. |
| Penalty appeals get pre-deposit limits | The proposed maximum is Rs 40 crore: Rs 20 crore under CGST and Rs 20 crore under SGST/UTGST, for an order imposing a penalty without any tax demand. |
| A personal hearing before blocking the credit ledger | The proposed Rule 86A amendment gives the taxpayer the option to file an objection and avail a personal hearing before the officer. |
| Relaxing the rules on goods interception: | The Council proposed specific intelligence and Joint Commissioner level authorisation, with action in the supplier’s or recipient’s State. Its proposal contains exceptions where no e-way bill or document showing origin or destination is available. |
| Return correction could be more structured | Proposed Rules 61(1A) and 61(1B) concern correcting liability and ITC so GSTR-3B aligns with GSTR-1/GSTR-1A/IFF and GSTR-2B. The Council said this mechanism may begin with the April 2027 return, following consultation. |
| IMS could gain a formal rule basis | IMS is already available. Eligible records may be accepted, rejected, or kept pending; no action is generally deemed acceptance for GSTR-2B generation. The Council proposed Rule 60(6A), including conditions for keeping credit notes pending. |
| Purchase side e-invoicing is being tested | GSTN has made RCMDOM and RCMIMP available in the sandboxes of all six authorised IRPs. The proposed extension concerns specified domestic RCM self-invoices and import-of-services self-invoices for potentially affected registered taxpayers with AATO of Rs 5 crore or more. Production commencement and legal applicability await notification. |
| Specified scrap transactions could need new tax treatment | The Council recommended RCM on specified waste and scrap supplied by unregistered persons to registered persons, and 2% TDS on specified registered-to-registered supplies. Before changing procurement treatment, check the notified scope and effective date. |
| A validation clause could affect multi-year notices | The Council proposed a clause for notices held invalid because they covered multiple financial years. The final legal wording and its effect on each case need to be reviewed; this does not automatically reverse every court outcome. |
| Registration workflows could change | The Council proposed automatic acceptance for specified amendments and conditional system-based cancellation or revocation for certain non-filing and bank-detail defaults. It also proposed changes for small e-commerce sellers. These are not universal automatic cancellation rules in force. |
Area | Current position / existing facility | Council recommendation and status |
| Refunds | Claims are handled under the present Section 54 and refund rules; an existing claim does not become an automatic payment because the Council recommends automation. | Proposed two phase, risk-based processing. Phase I includes automated excess cash ledger refunds, a 10-day acknowledgement/ deficiency-memo period, and provisional system sanction of 90% for eligible low risk zero-rated/inverted-duty claims.
Phase II proposes further automation for qualifying zero-rated claims. Act and rule changes are needed. |
| Refund eligibility | Existing formula restrictions and eligibility still govern input service and capital goods ITC. | Proposed input-service cut-off of 1st November 2026 for inverted duty; capital-goods cut-off of 1st April 2027 for qualifying zero-rated/ inverted-duty refunds, apportioned over 60 months. This is subject to amendment. |
| Returns | GSTR-1/GSTR-1A/IFF, GSTR-2B, and GSTR-3B already form part of reporting and reconciliation. | Proposed liability and ITC correction/ rectification routes under Rules 61(1A) and 61(1B). The mechanism may begin with the April 2027 return after consultation. No blanket ITC hard lock is established by the Council release. |
| IMS and portal statements | IMS already allows action on eligible inward supply records; no action is generally deemed acceptance. | Proposed Rule 60(6A) formalisation, Rule 86C Electronic Credit Reversal and Reclaim Statement (ECRS), Rule 86D RCM tax paid/ITC claimed statement, and invoice details in FORM GST DRC-03. Final conditions and rollout remain to be confirmed. |
| Blocked ITC | Existing Section 17(5) and general ITC conditions govern each claim. | Proposed relaxation for specified items, subject to an Act amendment, commencement, and Sections 16 and 17 eligibility. |
| E-invoicing | Existing supplier side e-invoicing remains in place. | Proposed recipient generated self-invoice reporting for specified RCMDOM/RCMIMP cases. Enterprises can perform sandbox testing; however production requirement awaits notification. |
| Notices and penalties | Existing Sections 73, 74, 74A, and 125 apply until amended. | Proposed Rs 10,000 (tax + cess) notice threshold, 5% route in specified non-fraud cases, and Rs 10,000 maximum general penalty. |
| Appeals, blocking, enforcement | Present appeal, Rule 86A, arrest, prosecution, and interception provisions continue to apply. |
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| Exports | The current IGST Act and Rule 89 determine export and refund positions. | Proposed foreign-branch services, certain Place of Supply (PoS) and SEZ/FTWZ changes, along with removal of the 1.5-times like-goods valuation restriction. Review enacted conditions before revising claims. |
| Registration | Existing registration, amendment, cancellation, and revocation processes apply. | Proposed automatic handling in specified cases and conditional system-based cancellation/ revocation. |
Date or period | What happened or was proposed |
| 8th October 2026 | The 57th GST Council meeting issued its recommendations. |
| 9th October 2026 | Official FAQs on the recommendations were published. |
| 16th October 2026 | GSTN published its RCMDOM/RCMIMP update. Sandbox testing is available |
| 1st November 2026 | Proposed ITC availment cut-off for eligible input services in inverted duty refund calculations. |
| 1st April 2027 | Proposed ITC availment cut-off for eligible capital goods in qualifying zero-rated and inverted-duty refunds. |
| April 2027 return period | The proposed alternative return amendment mechanism may be brought into force from this return. |
Change and legal/operational status | AP impact | Tax head impact | CFO impact | Why it matters/ what to prepare |
| Return alignment and correction | High impact: map invoice and credit-note exceptions. | High impact: own the return-correction process and sign off material differences. | High impact: request a GSTIN-level close view. | Dry-run liability and ITC reconciliations; do not assume filing is blocked by every mismatch. |
| IMS formalisation | High impact: assign owners for rejects, pending records, and credit notes. | High impact: oversee IMS exceptions, reversals, reclaims, and supporting evidence. | Medium impact: monitor unresolved credits. | No action is generally deemed accepted; avoid an invented all-invoice manual-action mandate. |
| RCMDOM/RCMIMP | High impact where specified RCM transactions occur: map self-invoices and test. | Medium impact: confirm RCM scope and test self-invoice reporting. | Medium impact: sponsor integration planning. | Scope and effective date are not yet a live production obligation. |
| System-based refunds | Medium impact: keep claim data complete. | Medium impact: check claim eligibility, data quality, and supporting evidence. | High impact: separate eligible provisional claims from final cash. | Test claim quality; no universal three day payment promise. |
| Input service/ capital goods refund eligibility | Medium impact: capture ITC availment date and asset category. | High impact: track ITC availment dates and assess refund eligibility. | High impact: model conditional working-capital upside. | Proposed cut-offs are 1 November 2026 and 1 April 2027, with capital goods spread over 60 months. |
| Section 17(5) relaxation | High impact: tag specified spend. | Medium impact: confirm the final scope, effective date, and ITC conditions. | High impact: quantify, but do not book, possible benefit. | Scope, effective date, and ordinary ITC conditions control any future claim. |
| Rs 10,000 notice threshold and 5% route | Low impact: retain clean transaction evidence. | High impact: review affected matters and settlement deadlines. | Medium impact: review dispute economics. | Aggregate tax and cess for specified notices; separate 30-day/60-day conditions for non-fraud settlements. |
| Multi-year notice validation | Low impact: preserve records where relevant. | High impact: reassess procedural and merits-based defences. | High impact for affected disputes. | Preserve procedural and merits arguments; seek case-specific legal advice. |
| Rule 86A objection and penalty-only appeal cap | Low impact | High impact: review blocked credit cases and appeal exposure. | Medium impact: review ledger-block and appeal exposure. | Hearing follows an objection to a block; proposed appeal cap applies only to penalty-only orders. |
| Arrest/prosecution changes | Low impact | High impact: reassess litigation and enforcement positions under the enacted law. | High impact for governance and risk review. | Do not tell directors that current arrest powers have ended. |
| E-way bill interception | Medium impact for goods movement teams. | Medium impact: review movement records and jurisdictional exceptions. | Medium impact for logistics risk. | Retain origin/destination documents; exceptions to jurisdictional restrictions matter. |
| Export and SEZ/FTWZ changes | Low to Medium impact, depending on transaction flow. | High impact: revisit export, branch, and place-of-supply positions. | High impact for exporters and global groups. | Reassess affected intercompany and goods-delivery positions against final conditions. |
| Specified scrap RCM/TDS | High impact for exposed procurement teams. | Medium impact: review tax treatment and supplier status for affected scrap. | Low to Medium impact, depending on exposure. | Identify transaction type, supplier registration status, and applicable notification. |
| Registration/cancellation | Low impact for most AP teams. | High impact: assign GSTIN owners and monitor registration status. | Medium impact for multi-GSTIN oversight. | Keep dormant registrations and bank details under review; no universal automatic cancellation. |
| Enterprise profile | Potential issue to assess; not a benefit already in force |
| Goods exporters | Whether proposed risk-based refund processing and the proposed Rule 89(4)(C) change alter qualifying claims. Do not substitute a fixed refund-cycle promise for your own ageing analysis. |
| IT, ITES, and global capability centres | Whether the proposed export of services changes affect specific supplies to or through overseas offices, subject to the enacted definition and conditions. |
| Inverted duty manufacturers | Whether the business qualifies on input vs output rate inversion, then whether eligible input-service and capital-goods ITC could enter its refund calculation. |
| Pharma and FMCG | Whether proposed Section 17(5) changes affect specified free samples or legally required destruction/write-offs, alongside IMS exception controls. |
| Telecom, oil and gas, and infrastructure | Whether a proposed Section 17(5) change could affect qualifying towers or pipelines. Past and future capex need separate legal analysis. |
| E-commerce, logistics, and banking | Review selected delivery-service recommendations, e-way bill changes, and proposed clarifications on Input Service Distributor (ISD) and Section 17(4). |
These proposals could affect working capital and risk, but they are not a guaranteed windfall. The decisions depend on which refund claims qualify, which credits become legally available, and how disputes may change once the final text takes effect.
Owns: Cash, compliance cost, enterprise risk.
Biggest potential changes: Refund processing, specified ITC restrictions, and dispute economics.
The CFO should ask the following questions to the team to understand the impact:
The tax team should review its dispute register and return process, without assuming that pending matters will lapse. Some of the proposals could change the economics of settling a case. Others, such as the proposed validation of multi-year notices, will need a close reading of the final legal text.
Owns: Returns, litigation, tax positions, consultation response.
Biggest potential changes: Dispute economics and the proposed return correction mechanism.
The tax team should:
| Current work | Preparation for a possible future state |
| Resolving return mismatches after filing | Identify liability, ITC, RCM, and reversal/reclaim differences before filing. The Council proposed defined correction routes, not a confirmed blanket filing stop. |
| Track notices across inboxes and case files | Maintain a register by amount, section, order date, limitation, procedural ground, and merits position. |
| Defend a notice on its multi-year format | Preserve the procedural argument and prepare a merits response pending the scope of any validation clause. |
| Challenge a blocked ledger balance | If Rule 86A is amended as proposed, use the objection route and hearing before decision on the objection, not before the initial block. |
| Prepare refund workings for officer review | Test the completeness of claims against the proposed automated/risk-based route. Officer scrutiny remains in specified cases. |
| Dormant GSTIN | Name a registration owner and monitor returns and bank details under current rules and proposed conditional changes. |
AP already plays an important role in purchase record quality and handling IMS exceptions. The proposed return rules and purchase side e-invoicing extension may require more structured hand-offs to the tax team.
Owns: Purchase records, supplier follow-up, IMS exceptions, RCM self-invoice data.
Biggest potential changes: More formal return reconciliation and sandbox preparation for RCMDOM/RCMIMP.
| Existing workflow | Better control now / proposed future dependency |
| Invoice booked; GST treatment reviewed at close. | Flag missing GSTIN, tax treatment, credit note, and supplier-data exceptions earlier. This is an internal control recommendation. |
| IMS records reviewed selectively. | Keep a documented workflow for records that should be rejected or kept pending. No action is generally deemed acceptance for eligible records. |
| Credit-note issues handled late. | Agree who reviews credit notes and monitor the proposed limits on keeping them pending under Rule 60(6A). |
| Imported service and domestic RCM entries handled in existing processes. | Identify transactions within the proposed RCMDOM/RCMIMP scope and test self-invoice payloads in sandbox. No production IRN mandate has been announced. |
| Reversals and reclaims maintained in working files. | Align workings with the proposed Electronic Credit Reversal and Reclaim Statement and RCM statement when rules and portal details are published. |
| Supplier payment follows contract and internal controls. | Escalate material filing/data gaps under documented payment policy and contract terms; do not describe withholding payment as a GST-law requirement. |
The proposed correction mechanism may start with the April 2027 return, but this is not a confirmed requirement for every GSTIN. Planning and sandbox testing can begin now. Change live controls only when the final legal and portal requirements are clear.
Persona/ Team | Now through December 2026: assess | January to March 2027: build and test | Proposed post-implementation discipline, subject to final rules |
| CFO | Get a GSTIN-level view of refund ageing, material blocked-credit categories, and large notices. Ask for a conditional ITC/refund opportunity assessment. | Put current-law versus proposal scenarios into budget and audit committee material. Fund the highest-value data/ control gaps. | Track eligible refund pipeline, credit actually available under enacted law, and explained return exceptions; do not report proposed benefits as realised. |
| Tax head | Tag disputes by section, tax amount, order date, and defence. Capture input-service ITC availment dates and ownership of all GSTINs. | Dry-run liability/ ITC reconciliations on actual data; respond to consultation if open. Review proposed export, IPR, ISD, and blocked-credit positions against final text. | Sign off material differences, claim eligibility, and notice decisions under operative rules. Retain a reasoned evidence pack. |
| AP and finance control | Map domestic RCM/import-of-services ledgers; test RCMDOM/RCMIMP in sandbox; classify IMS and credit-note exceptions. | Agree vendor escalation and credit note hand-offs. Test ERP data fields and matching; train stakholders on existing IMS no action treatment. | Operate a documented purchase exception workflow. Generate IRNs for specified self-invoices only if and when notified and applicable. |
| Approach | What it can help with | Limit to recognise |
| Staffing and process support | Clear exception backlogs, document positions, and assign sign-off. | More reviewers alone do not make disconnected ERP, purchase, portal, and return data agree. |
| Technology and workflow integration | Reduce repeated extraction, matching, and exception chasing; preserve evidence across systems. | Configuration, data quality, tax judgement, and approvals remain the team’s responsibility. |
| Blended model | Combine ownership and tax expertise with repeatable data controls. | Scope and staffing impact depend on transaction volume, current systems, and implementation quality. |
Most changes follow set rules: Matching records, raising documents, and keeping ledgers accurate. Straightforward automation suits these tasks better than AI because the answer must be consistent every time and easy to explain to a tax officer.
AI is more useful when the data isn't clean, or someone needs to read and make sense of text, such as invoice numbers that almost match, PDFs, notices and vendor emails. Decisions with legal or commercial implications should still rest with people.
| Task | Type | What changes on the ground | Person stays in charge of |
| Match books to GSTR-1 and 2B, across all GSTINs, before filing | Rules + AI | Exact matches clear in minutes. Where numbers differ because of a prefix, slash or typo, AI suggests possible matches. The analyst reviews a short list instead of going through 30 files. | Accepting suggested matches |
| IMS triage | Rules + AI | Invoices where the PO, goods receipt, amount, and GSTIN agree are proposed for acceptance. Only exceptions go to a person, with the reason clearly shown. | Every rejection, every pending invoice and the auto-accept policy |
| Credit notes against the IMS time limit | Rules | An ageing list with alerts a week before the deadline. | The commercial decision |
| Spot RCM and imported services at booking | AI + rules | The booking screen flags transactions that look like reverse charge, based on the vendor master, GL code and invoice text. | Confirming the flag |
| Raise the self-invoice and get the IRN | Rules | The self-invoice is generated from the AP entry, sent for an IRN and stored against the booking. No AI is needed. | Approving the document |
| Eligible or blocked credit, with date tags | Rules + AI | Rules apply the new eligibility criteria. AI scans a year of GL entries to estimate reversals that may no longer be needed and flag incorrectly used codes. | Changing the rules |
| Read vendor invoices from PDFs, paper or email | AI | GSTIN, invoice number, date, tax and IRN are read and checked before booking. The system flags a missing IRN or incorrect GSTIN before the invoice moves ahead. | Fixing flagged invoices |
| Vendor filing behaviour and follow-up | Rules + AI | A monthly scorecard tracks filing status. AI predicts which vendors may file late and drafts a specific email listing the exact missing invoices. | Payment decisions and what goes to key vendors |
| Refund working | Rules + AI | The working is built from return data. AI flags information that could increase the risk score before filing. | Filing the claim |
| Notices and litigation register | AI | Notices are read as they arrive to identify the amount, section, grounds and due date. The 30 and 60 day clocks start automatically, and we prepare first drafts of replies. | Every reply and settlement |
| Genuine buyer proof pack | Rules + AI | The invoice, e-way bill, payment and IMS action are linked for each invoice. | Defending a claim |
| Tracking new notifications | AI | Each new notification is summarised, along with what it means for your plan. | Interpreting it, always going back to the original source |
Enterprises should keep AI away from filing and sign-off because the return is the company's legal statement. The tax calculations and IRN generation follow fixed rules, so they don't need AI either.
Also, final interpretation of a notification must be made by humans, as should decisions to reject a key vendor's invoice or credit note.
Note: If you can't explain a decision to a tax officer later, don't automate it without proper oversight.
Whenever authorities introduce new rules, the workload grows. But that doesn't have to mean adding more headcount. The goal is to have technology that works alongside your team.
From April 2027, every GSTIN will need to reconcile invoices, act on every IMS document and self-invoice every RCM purchase before filing, month after month. Hiring more people simply means more hands working on the same spreadsheets.
A compliance platform can handle the matching, maintain the audit trail, and flag exceptions that need attention. That leaves your existing team free to focus on decisions, vendors and cash.
Where ClearTax fits each change recommended in the 57th GST Council meeting:
| Change/need | What your team may need to do | What to verify with ClearTax before making a product claim |
| Returns and IMS | Compare books, GSTR-1/GSTR-1A/IFF, GSTR-2B, and GSTR-3B; explain exceptions. | Which reconciliations, IMS actions, logs, filing scopes, and GSTIN-level controls are available in the proposed configuration? |
| RCM and reversal/reclaim statements | Maintain a traceable RCM and ITC working for any new portal statements. | Which data fields, Rule 42/Rule 37 workings, statement interfaces, and audit trails are supported and live? |
| RCMDOM and RCMIMP | Test specified self-invoice payloads in the official sandbox. | Is the specific integration tested for each IRP? What is available in sandbox versus production? |
| Refund claims | Organise claim data, supporting documents, and GSTIN-level ageing. | Which refund preparation and evidence functions are demonstrated, and which depend on future government APIs? |
| Section 17(5) review | Identify affected spend and apply enacted eligibility tests. | Can the configured workflow identify, review, approve, and evidence specific ITC categories without automatically presenting a legal conclusion? |
| Notices and buyer evidence | Track case deadlines and preserve invoice and payment evidence. | Which notice-tracking and document functions are available? Is any drafting capability approved for external description? |
| ERP data path | Reduce repeated extraction and preserve links to source records. | Which ERP connectors, transformations, registers, and implementation assumptions apply to this customer? |