GST Council Unveils Major Overhaul to Streamline Tax Administration and Boost Exports

Registration and Compliance

The GST Council has unveiled wide-ranging administrative reforms during its 57th meeting in New Delhi to overhaul tax procedures across the country. Union Finance Minister Nirmala Sitharaman announced that all approved changes will come into force from April 1, 2027. The government is shifting from a restrictive system to a black-list model for registrations, where low-risk taxpayers can secure automatic approval more easily. Small taxpayers selling through e-commerce platforms will now only need to register in their home State instead of every State they sell in.

Relief for Businesses and Exporters

Small businesses with a turnover of up to ₹5 crore can now file returns once a year instead of quarterly under an optional scheme that received in-principle approval. To curb harassment, the Council recommended removing arrest powers for GST officers, raising the prosecution threshold from ₹1 crore to ₹5 crore, and cutting the general penalty from ₹25,000 to ₹10,000. Inter-State vehicle interceptions will now require specific intelligence and authorisation from a joint commissioner-level officer. According to Indian Express, input tax credit refunds for capital goods like plant and machinery will be spread over 60 months starting April next year, while changes for input services can be availed from November 1, 2026. Service exporters will also benefit as testing, repair, certification, and research done in India for foreign clients will now be classified as exports even if goods stay within the country, and billing through overseas branches will now qualify for export benefits.

Context

These tax changes follow a period of stable monthly revenue collections and a settled taxpayer base nine years after the nationwide rollout of the indirect tax system. The administrative updates aim to resolve long-standing friction points for businesses, particularly regarding blocked working capital and complex compliance hurdles. Tax rates will no longer be discussed at every meeting and will instead be reviewed once a year.