New Delhi: The Goods and Services Tax (GST) Council has announced a series of proposed reforms aimed at simplifying tax compliance, speeding up refunds and reducing procedural difficulties for businesses. At its 57th meeting on Thursday, the Council focused on administrative and procedural changes rather than reviewing tax rates.
Union Finance Minister Nirmala Sitharaman said the decision followed changes to GST rates introduced last year. A separate meeting will now be held annually to review tax rates.
One of the key proposals concerns input tax credit (ITC) claims. Currently, a default by one business in a supply chain can affect the ITC returns of other participants. The Council has decided to constitute a committee of officials to examine a mechanism under which only the immediate subsequent participant’s return may be withheld, allowing other compliant businesses to continue filing returns. The committee will submit its report within three months, after which the recommendations will be placed before the Council. The proposed changes are expected to take effect from April 1 next year, subject to approval.
The government has also raised the minimum threshold for initiating legal proceedings under GST from ₹1 crore to ₹5 crore and removed the provision for a mandatory minimum sentence. In cases of delayed return filing, action will be restricted to recovery of the underlying tax, interest and penalties.
To simplify refund procedures, the acknowledgement period for refund claims has been reduced from 15 days to 10 days. The registration process will also be made more predictable, with greater clarity on required documents and system-based guidance for applicants.
Small suppliers seeking to sell goods through e-commerce platforms will benefit from simplified registration procedures. Taxpayers will also be allowed to amend information submitted during registration, while applications for cancellation of registration will be deemed accepted under the proposed streamlined mechanism.
The government will additionally develop a framework for a unified filing window for taxpayers operating across multiple states and Union Territories under different Central GST jurisdictions. Of the 69.5 lakh taxpayers registered under the Central GST framework, approximately two lakh fall into this category. The facility is planned for implementation from the next financial year.
The proposed reforms have received a positive response from business representatives. The Varanasi Furniture and Furnishing Trade Association welcomed the decisions, describing them as steps towards a simpler and more business-friendly tax regime.
Association president Ajay Kumar Gupta said reducing the refund acknowledgement period and raising the threshold for legal proceedings could provide relief to small and medium-sized businesses. He also welcomed the proposed review of ITC-related procedures, saying it could help protect compliant traders from disruptions caused by defaults elsewhere in the supply chain and prevent working capital from being unnecessarily blocked.
Gupta expressed hope that the measures would be implemented promptly and effectively, benefiting furniture and furnishing businesses in Varanasi and across Uttar Pradesh.
The proposed changes signal a shift towards making GST compliance more predictable and reducing procedural burdens on businesses, particularly smaller enterprises. Their impact will depend on the final recommendations, implementation timelines and operational details of the new mechanisms.
