GST Council may consider lower penalties, easier refunds, simpler registration and ITC reforms at its October 7 meeting.

The GST Council is expected to take up several proposals aimed at making tax compliance simpler for businesses and taxpayers at its October 7 meeting. The agenda is reported to include lower penalties, easier refunds, simplified GST registration and measures to reduce disputes related to input tax credit (ITC).

The proposed changes are part of a broader effort to streamline GST procedures and reduce compliance-related difficulties. Finance Minister Nirmala Sitharaman had earlier indicated that the upcoming meeting would focus on process reforms rather than changes to the GST rate structure.

GST Council May Consider Lower General Penalty

One of the proposals before the GST Council is a reduction in the general penalty applicable to taxpayers. According to reports citing official sources, the penalty could be reduced from Rs 25,000 to Rs 10,000.

The Council may also examine a separate penalty framework for cases where there is no fraud, intentional misstatement or suppression of facts to evade tax.

Under the reported proposal, the penalty in such cases could be limited to 10% of the tax involved, while the existing minimum penalty requirement could be removed.

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

Measures Proposed to Address ITC Disputes

Input tax credit-related issues are also expected to feature in the meeting. The Council may consider a mechanism to address situations where taxpayers lose ITC because suppliers fail to report invoice or debit-note details on time.

Another proposal could allow taxpayers to make corrections to tax liability and ITC information in their returns, with the aim of reducing mismatches and unnecessary notices.

Changes to the reporting process in GSTR-3B and improvements to the GST return-filing interface may also be considered.

GST Registration Process Could Become Easier

The GST Council is also expected to consider recommendations from its Law Committee on simplifying registration procedures.

One proposal involves issuing a comprehensive circular specifying the information required in GST registration applications. Clearer instructions could help reduce ambiguity and create greater consistency in the processing of applications.

The Council may also consider guidelines for field officers to ensure applications are handled more uniformly across different jurisdictions.

Automated approval of certain amendments to registration details through the GST common portal could also be considered, although changes involving the principal place of business may remain outside the proposed automated process.

A simpler process for cancellation of GST registration is another proposal reportedly under consideration.

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Small E-Commerce Sellers May Get Simpler Registration

A simplified registration mechanism for small businesses selling goods through e-commerce platforms could also be discussed.

The proposal is intended to address some of the registration-related difficulties faced by small sellers operating through electronic commerce operators across multiple states.

The GST Council had previously approved in principle a simplified registration concept for small suppliers using e-commerce platforms, with detailed modalities to be worked out.

Possible Relief on Late Fees for Small Taxpayers

Small taxpayers could also get relief from certain late-filing fees if another proposal is approved.

The reported proposal applies to taxpayers whose aggregate turnover was below Rs 5 crore in the preceding financial year. Under the suggested conditions, late fees could be waived where the delayed return is filed within the specified period.

The measure is aimed at easing compliance pressure on smaller businesses while encouraging timely filing.

Refund Process May See Further Changes

Refund-related procedures are another area expected to receive attention. The GST framework has already introduced risk-based provisional refunds, including a mechanism for eligible low-risk cases. The government has also highlighted measures intended to speed up refunds and simplify compliance.

The October meeting may consider additional procedural changes to make refund processing more efficient and reduce working-capital pressure on eligible taxpayers.

E-Invoicing and Reverse Charge Proposals

The Council may also examine expanding e-invoicing requirements to certain domestic supplies received from unregistered persons where GST is payable under the reverse-charge mechanism.

The reported proposal could also cover imports of services, potentially bringing additional transactions within the e-invoicing framework.

Permanent IPR Transfers May Be Classified as Services

Another item that could come before the GST Council relates to intellectual property rights.

The Council may consider treating the permanent transfer of intellectual property rights as a supply of services under GST. At present, the relevant provisions primarily address temporary transfers or licensing of intellectual property rights.

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

GST Rate Changes and the September 2025 Reform

The proposed process reforms follow the major GST rate restructuring that took effect on September 22, 2025. The revised structure primarily moved to 5% and 18% GST rates, while a 40% rate was introduced for specified luxury and sin goods.

While those changes focused on GST rates and exemptions, the upcoming meeting is expected to concentrate on compliance procedures, registration, penalties, refunds and ITC-related matters.

What Will Happen at the October 7 Meeting?

The proposals discussed above are subject to consideration and approval by the GST Council. Until the Council takes a final decision and the relevant notifications or amendments are issued, the reported measures should not be treated as implemented rules.

If approved, the proposals could affect several areas of GST compliance, particularly penalties, registration procedures, late fees, refunds and input tax credit reporting.

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