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How to Cancel GST Registration (2026): Form GST REG-16, Auto Acceptance and Revocation

Posted on October 10, 2026October 10, 2026 by CA Meet Dhrangadhariya

Last updated: 10 October 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

Apply online in FORM GST REG-16 on the GST portal, within 30 days of the event that makes cancellation necessary. There is no time limit where a sole proprietor has died.
File every pending return and clear all unstayed tax, interest and penalty first. If you reported outward supplies in GSTR-1 or IFF for a period, GSTR-3B for that period must also be filed before you apply.
Following the 57th GST Council meeting, an application that meets those conditions is to be accepted automatically by the system, with confirmation in the new FORM GST REG-38.
If the system cancels your registration for non-compliance, you can apply for revocation in FORM GST REG-21 within 180 days of the cancellation date, and the system is to restore it once the defaults are cured.
Four grounds on which an officer could cancel a registration under rule 21 are recommended for deletion, including anti-profiteering and a GSTR-1 against GSTR-3B excess.

A GST registration that is no longer needed does not lapse on its own. Until it is cancelled, returns keep falling due, and late fees and notices keep accruing against a business that may have closed months ago. This is one of the most common avoidable problems we see.

The process is about to get easier. On 09/10/2026 the Press Information Bureau issued two sets of FAQs, one on the cancellation of GST registration and one on the GST registration application, setting out both how the process works today and what changes after the 57th GST Council meeting of 08/10/2026.

Read the two apart. The form, the 30 day limit and the conditions below are the process as it stands. Automatic acceptance, FORM GST REG-38, system cancellation and system revocation are Council recommendations, which take effect only through the amendments and notifications that follow. Where something is not yet in force, this guide says so.

When you can apply for cancellation

You can apply where any of the following has happened:

The business has been completely discontinued, closed down, or transferred in full, for any reason.
There is a change in the constitution of the business that results in a new PAN.
The business has been amalgamated, demerged or disposed of.
You are no longer liable to be registered.

That last one catches more people than they expect. A voluntary registration taken to satisfy one customer, or a registration taken when turnover was expected to cross the threshold and it never did, both sit here.

The 30 day rule

Situation	Time limit to apply
Any event warranting cancellation	Within 30 days of the event
Death of a sole proprietor	No time limit

The 30 days run from the event itself, not from the date you get round to dealing with it. If you closed the business in March and remember in October, you are already late, and the registration has been accruing return obligations the whole time. Apply anyway, because every further month adds to the problem.

How to apply, step by step

Log in to the GST portal with your own credentials.
Go to Services, then Registration, then Application for Cancellation of Registration, which opens FORM GST REG-16.
Enter the reason for cancellation, the date from which cancellation is sought, the details of closing stock, and any tax liability on that stock.
Verify with a Digital Signature Certificate or an Electronic Verification Code and submit.
An ARN is generated. Track the status on the portal against that number.

The closing stock figure is the step that gets rushed. You are declaring the stock of inputs, semi-finished and finished goods and capital goods held on the day before cancellation takes effect, and paying back the credit attributable to it. Getting that wrong turns a routine cancellation into a demand later.

What must be clear before you apply

All three of these have to be satisfied:

Every return due on or before the date of the application has been filed.
All tax, interest and penalty has been paid, except anything stayed by a court, Tribunal or Appellate Authority.
Where you furnished outward supplies in GSTR-1 or the Invoice Furnishing Facility for a tax period, the GSTR-3B for that same period has also been filed before you submit the application.

That third condition is the one that trips up a business winding down, because it is common to keep reporting invoices in GSTR-1 while letting GSTR-3B slip. The application will not go through on an automated basis until the pair is matched up.

Automatic acceptance: what changes

This is the substance of what the Council recommended, and it splits by how much credit you have passed on.

Your position	How the application is to be processed
Never passed on input tax credit above ₹2.5 lakh in any month since registration	Accepted automatically by the system once the conditions above are met, with confirmation sent on the common portal in FORM GST REG-38
Passed on credit above ₹2.5 lakh in any month, phase 1	Processed automatically if you file the final return in FORM GSTR-10 along with the FORM GST REG-16 application
Passed on credit above ₹2.5 lakh in any month, phase 2	File FORM GST REG-16 alone, and the system processes it

FORM GST REG-38 is a new form, and in the second phase FORM GST REG-16 itself is to be amended so the GSTR-10 details can be given inside the cancellation application rather than as a separate filing.

Cancellation by the department, and getting the registration back

Two separate things are changing here.

System cancellation. Where a registration has been suspended by the portal for non-compliance, such as not filing returns for six consecutive months or not furnishing bank account details as rule 10A requires, and the default is not cured within the time allowed, section 29 is being amended so that the system cancels the registration without an officer being involved.

System revocation. Cure the default and file an application for revocation in FORM GST REG-21 within 180 days of the date of cancellation, and the system is to restore the registration, again without officer intervention. The 180 days matter: miss that window and you are into a far harder conversation, or a fresh registration with a new GSTIN and the loss of continuity that brings.

Four grounds for officer-initiated cancellation go. The Council recommended omitting these from rule 21 of the CGST Rules, 2017:

availment of input tax credit in violation of section 16 or the rules made under it;
violation of section 171, the anti-profiteering provision;
violation of rule 86B;
where outward supplies declared in FORM GSTR-1 or 1A for one or more tax periods exceed those declared in FORM GSTR-3B.

The last of those is significant in practice. A GSTR-1 against GSTR-3B gap is a reconciliation problem and often an innocent one, and it should not by itself have put a registration at risk of cancellation.

While you are at it: the registration side is changing too

The companion FAQ deals with applying for registration rather than cancelling it, and the direction is the same.

A comprehensive guideline has been issued on what information and documents each field of the application needs, covering constitution of business, principal place of business and the rest, and it also guides officers across the Centre and the States so that processing is uniform.
A circular is to carry a checklist of the documents and information needed, so an applicant can assemble everything before starting.
FORM GST REG-01 is to get drop-down boxes and tool-tips, and the portal is to show only the documents relevant to the type of premises selected, so an owned premises and a rented premises no longer present the same list.
Importantly, no additional documents are to be uploaded or demanded by the officer beyond that list, which is to be clarified by circular.
A step-by-step manual already exists on the portal under Help and Taxpayer Facilities, then GST Knowledge Portal, then Register with GST.

Common mistakes we see

Treating closure of the business as closure of the registration. It is not. Until REG-16 is filed and accepted, the returns keep falling due.
Missing the final return. FORM GSTR-10 is a separate obligation from the cancellation application, and it carries its own late fee.
Forgetting the stock liability. Credit on stock held at cancellation has to be reversed or paid.
Letting the 180 day revocation window lapse after a system cancellation.
Cancelling when suspension was the real answer. If the business is pausing rather than ending, cancelling and re-registering later costs you the GSTIN and the continuity with customers and the e-way bill system.

What to do now

If you have a dormant registration, deal with it now rather than after the automatic route is notified. Nothing in the recommendations removes the returns and late fees already accrued.
Reconcile GSTR-1 against GSTR-3B for every period before you apply, because the automated route depends on it.
Work out the closing stock and the credit on it before you fill in the form, not inside it.
Diarise the 180 days from the date of any system cancellation.
Wait for the notification before relying on automatic acceptance, FORM GST REG-38 or system revocation. The FAQs describe the design, not law in force.

How CSM & Co LLP can help

We can review whether cancellation or suspension is the right answer for a business that is pausing rather than closing, compute the stock and credit position that has to be declared in FORM GST REG-16, bring pending returns and the GSTR-1 against GSTR-3B reconciliation up to the standard the automated route needs, file the final return in FORM GSTR-10, and handle a revocation application in FORM GST REG-21 where a registration has already been cancelled for non-compliance. Please reach out to our team and we will be happy to assist.

Frequently asked questions

When can I apply to cancel my GST registration?

Where the business has been discontinued, closed or fully transferred, where a change in the constitution of the business results in a new PAN, where the business has been amalgamated, demerged or disposed of, or where you are no longer liable to be registered.

Is there a time limit to apply for cancellation?

Yes. The application should be filed within 30 days of the event that warrants cancellation. The exception is the death of a sole proprietor, where no time limit applies.

Which form is used to cancel GST registration?

FORM GST REG-16, filed online on the GST portal under Services, then Registration, then Application for Cancellation of Registration, and verified with a DSC or an EVC.

What must I do before applying?

File every return due up to the date of the application and pay all tax, interest and penalty that has not been stayed by a court, Tribunal or Appellate Authority. If you furnished outward supplies in GSTR-1 or the Invoice Furnishing Facility for a tax period, you must also file GSTR-3B for that period before applying.

Will my cancellation application be accepted automatically?

That is what the GST Council recommended at its 57th meeting. Where you have never passed on input tax credit above ₹2.5 lakh in any month since registration and the conditions are met, the system is to accept the application and confirm it in FORM GST REG-38. Where you have crossed that figure, phase 1 requires the final return in FORM GSTR-10 to be filed along with the application, and phase 2 removes even that step.

My registration was cancelled by the system for not filing returns. Can I get it back?

Cure the default, then apply for revocation in FORM GST REG-21 within 180 days of the date of cancellation. The Council recommended that the system restore the registration without an officer having to act.

Official sources

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

GST Registration Application and Amendment (2026): Documents, REG-01, REG-14 and the Automatic Route

Posted on October 10, 2026October 10, 2026 by CA Meet Dhrangadhariya

Last updated: 10 October 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

Apply on the GST portal under Services, then Registration, then New Registration. A comprehensive guideline has been issued on what each field of the application needs, and a circular is to carry the full document checklist.
FORM GST REG-01 is to get drop-down boxes and tool-tips, and the portal is to show only the documents relevant to the type of premises you select, so owned and rented premises no longer present the same list.
No additional documents are to be uploaded or demanded by the officer beyond that list, which is to be clarified by circular.
Legal name, constitution of business and additional place of business move from core to non-core amendments, so FORM GST REG-14 is processed automatically with no officer approval.
Principal place of business stays a core amendment for a normal registration under rule 9, with a 15 day approval window, but is automatic for a registration taken under rule 14A.

Two things have made GST registration painful for years. The first is that nobody could say with confidence which documents an application actually needed, so officers asked for different things in different States and applications were rejected over paperwork rather than substance. The second is that changing almost anything afterwards meant waiting on an officer.

Both are being addressed. On 09/10/2026 the Press Information Bureau published FAQs on the GST registration application and on amendment in GST registration, following the 57th GST Council meeting of 08/10/2026.

As with the rest of this package, separate the two. The portal path, FORM GST REG-01 and FORM GST REG-14 are how things work today. The document guideline, the redesigned form, the automatic amendment route and the bar on officers asking for extra documents are the reform, and they take legal effect through the circular and the amendments that follow. Where the FAQ describes something as still to come, this guide says so.

Where and how to apply

Apply online at the GST portal, under Services, then Registration, then New Registration.

A step-by-step manual already exists on the portal itself, under Help and Taxpayer Facilities, then GST Knowledge Portal, then Register with GST. The application form also carries tool-tips and real-time contextual guidance meant to help you fill each field correctly the first time.

The documents problem, and what is being done about it

This is the substance of the registration reform, and it is worth being precise about what has been promised.

A comprehensive guideline has been issued setting out the information and documents required in each field of the application, covering constitution of business, principal place of business and the rest. Importantly, it is addressed to tax officers across the Centre and the States as well, so that processing is uniform rather than varying by jurisdiction.
A circular is to carry the checklist, so an applicant can gather everything before starting rather than discovering requirements one rejection at a time.
A detailed FAQ on the registration application and its processing is also to be issued by circular.
FORM GST REG-01 is to be amended to add drop-down boxes and tool-tips naming the prescribed documents, so the taxpayer and the officer are looking at the same list.
The portal will show only the documents relevant to the premises type you select. Owned premises and rented premises will present different requirements, instead of one undifferentiated list.
No additional documents are to be uploaded, or sought by the officer, in respect of the registration application. This is to be clarified by circular.

That last point is the one that changes the experience most. A fixed, published list that an officer cannot add to is the difference between a predictable application and an open-ended negotiation.

Proof of principal place of business

A consolidated list of documents accepted as proof of principal place of business and additional place of business in different situations is to be provided in the circular, with FORM GST REG-01 amended to match. The portal will then surface only the relevant subset once you select the premises type.

Until that circular is out, assemble proof on the existing basis and expect the list to be narrowed and clarified rather than widened.

Amendments: core and non-core, and what just moved

Every change to a registration is classified as either core (officer approval required) or non-core (processed by the system). The reform moves three things across that line.

Change	Previously	Now	Form
Legal name of the business	Core, officer approval	Non-core, automatic	FORM GST REG-14
Constitution of the business	Core, officer approval	Non-core, automatic	FORM GST REG-14
Additional place of business	Core, officer approval	Non-core, automatic	FORM GST REG-14
Principal place of business, registration under rule 14A	Core, officer approval	Non-core, automatic	FORM GST REG-14
Principal place of business, normal registration under rule 9	Core	Still core, officer approval	FORM GST REG-14

Note the split on principal place of business. If your registration was taken through the simplified route under rule 14A, changing it is automatic. On a normal registration under rule 9, it remains a core amendment and goes to an officer.

Changing the legal name

File FORM GST REG-14 on the common portal. Once the PAN details you furnish validate successfully, the system amends the legal name. No officer involved.

Adding an additional place of business

File FORM GST REG-14 with the proof of place of business specified in the list attached to FORM GST REG-01. The system processes it and adds the APoB.

You do not have to wait between applications. Because an additional place of business is accepted automatically, you can file the next amendment straight away rather than waiting for the previous one to clear. For a business opening several branches or warehouses at once, that removes a real bottleneck.

Changing the principal place of business on a normal registration

This one still runs on a clock, and the clock is worth knowing:

File FORM GST REG-14 with the proof of principal place of business listed against FORM GST REG-01.
No discrepancy: the proper officer approves within 15 days of the application.
Discrepancy: the officer issues a show cause notice within 15 days of the application.
You reply within 7 working days of the notice being issued.
The officer acts within 7 working days of receiving your reply.

Plan a premises move around that timetable rather than assuming same-week processing, and get the address proof right first time, because a show cause notice adds a fortnight or more to the worst case.

How this connects to the rest of the registration lifecycle

Getting registered automatically. Under rule 14A, registration is granted by the portal without an officer where the applicant does not intend to pass on input tax credit of more than ₹2.5 lakh a month. The reforms above are aimed at the applications that fall outside that route.
Selling through e-commerce platforms. A new rule 14B is recommended, letting a small supplier register in a State where it has no physical presence by declaring the e-commerce operator’s warehouse there as its principal place of business, subject to the same ₹2.5 lakh monthly credit limit and to conditions.
Closing a registration. The cancellation side has its own set of changes, including automatic acceptance and a new FORM GST REG-38. We covered that separately in our note on how to cancel GST registration.
The wider package. The registration changes are one part of the 57th GST Council recommendations, which also cover refunds, input tax credit, penalties and the withdrawal of arrest powers.

Practical points

Match the premises type to the proof you actually hold before you start the application. Most rejections trace back to address proof that does not fit the category selected.
An automatic amendment is not a licence to be careless. The legal name change validates against PAN, and an APoB still needs proper proof attached. The system is removing the approval step, not the evidence requirement.
Keep the rule 14A distinction in mind. Whether your principal place of business can be changed automatically depends on how the registration was obtained in the first place, which is not something most businesses track.
Do not time a move or a new branch on the assumption that the automatic route is already live. Until the circular and the amendments are notified, the existing classification applies.

What to do now

Wait for the circular before relying on the fixed document list or on an officer being unable to ask for more.
If you have amendments queued, note that additional places of business will no longer need to be filed one at a time once the change is in force.
If a principal place of business change is coming on a normal registration, build the 15 day plus 7 plus 7 timetable into your planning.
Check how each of your registrations was obtained, because rule 14A registrations get the automatic principal place of business route and others do not.

How CSM & Co LLP can help

We can prepare and file a GST registration application with the documents matched to the premises type, so it clears first time rather than cycling through queries; handle amendments in FORM GST REG-14, including a principal place of business change that still needs officer approval and any show cause notice that follows; advise whether the simplified route under rule 14A or the proposed rule 14B for e-commerce sellers fits your situation; and review a group of registrations across States for consistency before the new document guidelines are enforced. Please reach out to our team and we will be happy to assist.

Frequently asked questions

Where do I apply for GST registration?

Online on the GST portal at gst.gov.in, under Services, then Registration, then New Registration. A step-by-step manual sits under Help and Taxpayer Facilities, then GST Knowledge Portal, then Register with GST.

Is there a definitive checklist of documents for GST registration?

A comprehensive guideline has been issued covering the information and documents needed for each field, and the full checklist is to be issued through a circular so applicants can assemble everything before starting.

Can the officer ask me for documents beyond that list?

No. The position stated is that no additional documents are to be uploaded or sought by the officer in respect of the registration application, and that is to be confirmed by circular.

Which amendments no longer need officer approval?

Legal name of the business, constitution of the business and additional place of business move from core to non-core, so FORM GST REG-14 is processed automatically by the system. Principal place of business also becomes automatic, but only for a registration obtained under rule 14A.

How do I change my principal place of business on a normal registration?

File FORM GST REG-14 with the proof of place of business listed against FORM GST REG-01. It stays a core amendment, so the officer approves within 15 days where there is no discrepancy, or issues a show cause notice within 15 days, to which you reply within 7 working days, and the officer then acts within 7 working days.

Do I have to wait for one amendment to be approved before filing another?

No, not for an additional place of business. Because those are accepted automatically by the system, there is no waiting period before filing the next one.

Official sources

Disclaimer

GST Refunds (2026): Automated 90% Provisional Sanction, the 10 Day Clock and Wider Net ITC

Posted on October 10, 2026October 10, 2026 by CA Meet Dhrangadhariya

Last updated: 10 October 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

The officer must issue an acknowledgement in FORM GST RFD-02 or a deficiency memo in FORM GST RFD-03 within 10 days, down from 15. If neither arrives, the application is deemed acknowledged by the system.
For low risk claims on zero rated supplies or inverted duty structure, the system sanctions 90% provisionally with no officer involvement, and the provisional order in FORM GST RFD-04 is to issue within three working days of acknowledgement.
Refund of excess balance in the electronic cash ledger becomes fully automatic, with no officer role at all.
Net ITC widens: credit on input services availed on or after 01/11/2026 enters the inverted duty computation, and credit on capital goods availed on or after 01/04/2027 enters both computations at one sixtieth a month over 60 months.
Inversion is still tested by comparing the tax rate on inputs against the rate on output supplies. A higher rate on input services alone does not create an inverted duty structure.

For an exporter or a business sitting in an inverted duty structure, the GST refund has never really been about eligibility. It has been about waiting. Money that is admittedly yours sits with the government while an application moves through acknowledgement, scrutiny and sanction at whatever pace the queue allows.

The refund machinery is being rebuilt to take the officer out of the first and largest part of that journey. On 09/10/2026 the Press Information Bureau published detailed FAQs on refunds and on refund of credit accumulated on input services and capital goods, following the 57th GST Council meeting of 08/10/2026.

The usual caution applies, and it matters more here than anywhere. These are recommendations and design, to be given effect by amendment and notification, and they roll out in two phases “as per readiness of the system”. Two of the most valuable changes carry dates in the future by their own terms: 01/11/2026 for input services and 01/04/2027 for capital goods. Do not restructure a refund position on the strength of this.

The two phases

Phase 1

The time limit for an acknowledgement or a deficiency memo drops from 15 days to 10 days. If the officer does neither within 10 days, the application is deemed acknowledged by the system.
90% of the amount claimed is sanctioned provisionally by the system, automatically, for acknowledged low risk claims on zero rated supplies or the inverted duty structure.
Refund of any balance in the electronic cash ledger is sanctioned finally by the system, automatically.

Phase 2

The system itself acknowledges the application after validating the information in it.
On a mismatch, the system tells you the specific errors so you can correct them and file afresh. If validation fails again, the application goes to the proper officer for scrutiny rather than stalling.
For low risk zero rated claims, even the final refund is granted automatically.

The clock, and the forms

Stage	Form	Timing
Refund application	FORM GST RFD-01	Filed on the portal
Acknowledgement	FORM GST RFD-02	Within 10 days, or deemed, issued by the system
Deficiency memo	FORM GST RFD-03	Within 10 days, and never after an acknowledgement
Provisional refund order	FORM GST RFD-04	Within three working days of acknowledgement
Payment order	FORM GST RFD-05	On provisional sanction in phase 2
Final refund order	FORM GST RFD-06	After the officer’s scrutiny

Three working days from acknowledgement to the provisional order is the number to hold on to. Combined with the 10 day acknowledgement window, a clean low risk claim should see 90% of the money inside a fortnight or so of filing.

What “low risk” buys you, and who does not get it

For a low risk claim on zero rated supplies or the inverted duty structure, 90% is sanctioned by the system after acknowledgement with no officer interface at that stage at all. The officer cannot refuse provisional sanction on a low risk claim, because the officer is not in that loop. Scrutiny and the final order in FORM GST RFD-06 come afterwards.

If a claim is not classified as low risk, the officer scrutinises it after acknowledgement, both for provisional sanction and for the final refund.

Excluded from provisional refund altogether:

Notified categories of persons supplying commodities such as areca nuts, pan masala, tobacco and manufactured tobacco substitutes, and essential oils.
Anyone who has not undergone Aadhaar authentication under rule 10B. See notification No. 14/2025 Central Tax dated 17/09/2025.
Cases where a DRC-01 has been issued against an RFD-06, where an APL-03 has been filed without a corresponding APL-04, or where an APL-07 has been filed against an appellate order and the APL-04 is still awaited.

That Aadhaar authentication point deserves attention. It is a one-off piece of housekeeping that silently decides whether your refunds run on the fast track or the slow one.

Deficiency memos: the trap that resets everything

If the officer finds a deficiency, FORM GST RFD-03 issues, and then:

The application is not processed further. You must file a fresh application in FORM GST RFD-01 for the same period after fixing the deficiency.
Any credit or cash debited from your ledgers when you filed is re-credited automatically once the memo is issued.

The protection worth knowing is the other way round: once an acknowledgement has been issued, no deficiency memo can follow, on any ground. Getting past acknowledgement closes that door.

Net ITC widens: input services and capital goods

This is the structural change, and it is the one with money in it.

At present, under rule 89, “Net ITC” excludes credit on capital goods for a zero rated refund, and excludes credit on both input services and capital goods for an inverted duty refund. That is being changed:

Credit on	Enters the computation for	For credit availed on or after	How much
Input services	Inverted duty structure, rule 89(5)	01/11/2026	In full, subject to eligibility
Capital goods	Zero rated, rule 89(4), and inverted duty, rule 89(5)	01/04/2027	One sixtieth per month over 60 months, from the month the credit is availed

Two qualifications on capital goods. The credit counted is only that attributable to the relevant period, meaning capital goods on which credit was availed on or after 01/04/2027 in any month not earlier than 59 months before the last month of the relevant period, computed by the formula in rule 89. And only eligible credit counts: anything blocked under section 17(5) or otherwise inadmissible is out, and any reversal required under the Act or Rules, including rule 43, attributable to the months in the relevant period is deducted.

The change does not affect zero rated supplies made on payment of integrated tax, because there is no restriction on using capital goods credit to pay tax on those supplies in the first place.

The point most people will get wrong

Widening Net ITC does not widen who is eligible. Inversion is still established by comparing the rate of tax on inputs against the rate on output supplies, and nothing else. The FAQ gives two cases, and they are worth reproducing because the distinction decides entitlement.

Position	Case A	Case B
Rate on inputs	18%	5%
Rate on output supplies	5%	5%
Rate on input services	18%	18%
Inversion exists?	Yes, inputs are taxed higher than outputs	No, inputs and outputs are at the same rate
Credit on input services in Net ITC?	Yes, for credit availed on or after 01/11/2026	No, not eligible for an inverted duty refund at all

In short, a high rate on services you buy does not by itself get you a refund. The proposal does not expand the class of persons eligible under clause (ii) of the first proviso to section 54(3).

Other restrictions that still apply

No inverted duty refund on goods notified under notification No. 5/2017 Central Tax (Rate) dated 28/06/2017, as amended.
Section 54(10) and 54(11) continue to allow refunds to be withheld where the matter is under appeal or other proceedings.
The ₹1,000 floor stays, but is now applied to the total refund across all tax heads taken together rather than head by head. It does not apply to a refund on goods exported out of India with payment of tax.
The 1.5 times cap goes. The condition in rule 89(4)(C) requiring turnover of zero rated supply of goods to be valued at 1.5 times the value of like goods supplied domestically is being removed, which the FAQ attributes directly to the difficulty taxpayers had in sourcing that comparison.

Interest, when things run late

Delayed sanction: if a refund is not sanctioned within the statutory time limit, interest is payable on the delay beyond 60 days under section 56.
Withheld refunds: where a refund withheld under section 54(11) later becomes payable after appeal or other proceedings, interest at 6% runs from the date the refund was withheld until the date it is actually paid.

Filing: what the system will and will not do for you

File your returns first. Every return due on or before the date of the refund application must already be filed. The FAQ’s own example: a refund application filed on 03/04/2026 requires the February 2026 return to have been filed.
Nothing goes to the office physically. The process is fully electronic, and it stays that way after the amendment. All statements, declarations, undertakings and supporting documents are uploaded on the portal.
No invoices with the claim. Paragraph 36 of circular No. 125/44/2019 GST dated 18/11/2019 says so, and that is unchanged.
The form captures data instead of scans. What used to be uploaded as a scanned document is captured inside the application itself so the system can match it. That is what makes automated validation possible.
Phase 2 verifies your export trail automatically, through integration with ICEGATE for shipping bills and bills of export, EDPMS of the RBI for realisation of export proceeds for services, and SEZ Online for supplies to SEZ units and developers.

How to keep your claim on the automated track

The FAQ is unusually direct about this, and it amounts to one idea: the system is matching your numbers against other filings, so inconsistency is what throws you off the fast track.

Fill the application correctly, with no clerical errors.
Make the data match your returns and other documents such as the shipping bill.
Check the application properly before submission, because an error means a deficiency memo and a fresh filing.
Exclude ineligible credit, in particular anything restricted under section 17(5), from the refund computation.
Carry out reversals required under rule 42 or rule 43 as prescribed.

What to do now

Complete Aadhaar authentication under rule 10B if you have not. It is the cheapest thing on this list and it gates access to provisional refunds entirely.
Tag credit on input services from 01/11/2026 separately in your records if you claim inverted duty refunds, because the entitlement starts from the date the credit is availed.
From 01/04/2027, track capital goods credit month by month, since it enters the claim at one sixtieth a month and the computation looks back up to 59 months.
Reconcile the refund application against the returns before filing, not after a deficiency memo.
Check whether your inversion is genuine on the inputs against outputs test before counting on the wider Net ITC.
Wait for the notifications before building any of this into a cash flow forecast.

How CSM & Co LLP can help

We can test whether an inverted duty structure genuinely exists on the inputs against outputs comparison before a claim is built on it, compute Net ITC under the widened rule 89 including the one sixtieth monthly capital goods allocation and the rule 43 reversals that have to be deducted, reconcile a refund application against the returns and shipping bills so it stays on the automated track, deal with a deficiency memo and the fresh filing it forces, and pursue interest where a refund has run past the statutory timeline or was withheld under section 54(11). Please reach out to our team and we will be happy to assist.

Frequently asked questions

How much of my refund will be sanctioned automatically?

For a low risk claim on zero rated supplies or the inverted duty structure, the system sanctions 90% of the amount claimed on a provisional basis with no officer interface. The balance follows after the officer completes scrutiny and issues the final order in FORM GST RFD-06.

What happens if the officer does nothing within 10 days?

The application is deemed acknowledged. An acknowledgement in FORM GST RFD-02 is made available on the common portal once the 10 days expire. Deemed acknowledgement only starts the processing clock; it does not mean the refund is approved.

Can a deficiency memo be issued after my application is acknowledged?

No. Once an acknowledgement has been issued for a refund application, no deficiency memo can be issued for that application on any ground.

Who is excluded from the automatic provisional refund?

Notified persons supplying commodities such as areca nuts, pan masala, tobacco and manufactured tobacco substitutes and essential oils, anyone who has not completed Aadhaar authentication under rule 10B, and cases where a DRC-01 has been issued against an RFD-06, an APL-03 filed without a corresponding APL-04, or an APL-07 filed where the APL-04 is still awaited.

Does a higher tax rate on input services create an inverted duty structure?

No. Inversion is determined by comparing the rate on inputs with the rate on output supplies only. If inputs and outputs are both at 5%, a service taxed at 18% does not make you eligible, even after the Net ITC change.

When do I get interest on a delayed refund?

Where the refund is not sanctioned within the statutory time limit, interest runs on the delay beyond 60 days under section 56. Separately, where a refund withheld under section 54(11) later becomes payable, interest at 6% runs from the date it was withheld to the date it is paid.

Is there a minimum refund amount?

Yes, ₹1,000, and it is applied to the total across all tax heads together rather than head by head. It does not apply to a refund on goods exported out of India with payment of tax.

Official sources

Disclaimer

GST Arrest and Prosecution (2026): Section 69 Removed, ₹5 Crore Threshold and Court Discretion

Posted on October 10, 2026October 10, 2026 by CA Meet Dhrangadhariya

Last updated: 10 October 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

The GST Council has recommended removing the power of arrest under GST altogether, by omitting section 69 of the CGST Act. Once that is enacted, no person is to be arrested for an offence under the GST law.
Prosecution survives, but the threshold rises from ₹1 crore to ₹5 crore, and it is launched by a complaint to the competent court, not by the department acting alone.
Punishment becomes imprisonment or fine or both, instead of imprisonment and fine, and the minimum six months imprisonment under section 132(3) goes, so the court gets real discretion.
Maximum imprisonment is rationalised: up to five years where the amount exceeds ₹10 crore, and up to two years where it exceeds ₹5 crore but not ₹10 crore.
Three offence descriptions are cut back, including the whole of clause (i), which the FAQ says was hard to quantify and open to subjective interpretation.

Of everything the 57th GST Council recommended, this is the change that alters the relationship between a business and the tax department most directly. The power to arrest a person for a GST offence is to be taken out of the law entirely.

The official FAQ of 09/10/2026 puts it plainly: after the proposed amendment, no person shall be arrested for an offence under the GST law. The press release of 08/10/2026 describes the mechanism, which is the omission of section 69 of the CGST Act, 2017.

This has not happened yet, and the distinction is not academic here. Section 69 remains on the statute book until Parliament and the State legislatures pass the amendment and it is brought into force. Anyone currently facing an investigation is governed by the law as it stands today, not by what the Council has recommended. Take advice on your actual position rather than on this page.

What is changing, in one view

Item	Position today	Recommended
Power of arrest	Section 69 of the CGST Act	Omitted entirely
Prosecution threshold	₹1 crore	₹5 crore
Punishment structure	Imprisonment and fine	Imprisonment or fine or both
Minimum imprisonment, section 132(3)	Six months	Removed
Maximum imprisonment, amount above ₹10 crore	Not stated in the FAQ	Five years, or fine, or both
Maximum imprisonment, amount above ₹5 crore up to ₹10 crore	Not stated in the FAQ	Two years, or fine, or both
Clause (i) of section 132(1)	In force	Omitted
Clause (e) of section 132(1)	Covers evading tax and fraudulently obtaining refund	Confined to fraudulently obtaining refund
Clause (h) of section 132(1)	Includes “or in any other manner deals with”	Those words omitted
Clause (c) of section 132(1)	Wider	Redrafted to cover only fraudulent availment of credit without receipt of goods or services or without an invoice

Arrest goes, prosecution stays

It is worth being exact about what survives, because the headline invites over-reading.

No arrest. The arrest provisions are removed. There is no power to take a person into custody for a GST offence once the amendment is in force.
Prosecution continues, but only before the competent court, on a complaint filed by the tax authorities, and only where the amount involved exceeds ₹5 crore.

So the department’s route to a criminal sanction runs through a court from the outset, rather than beginning with a detention. For a business under investigation, the practical change is that the threat which has shaped the conduct of GST investigations for years is no longer available.

One boundary to keep in mind. All of this concerns arrest and prosecution under the GST law. It says nothing about powers that may exist under other statutes, and nothing here should be read as a general immunity. If an investigation touches other legislation, that is a separate question and a separate conversation.

Punishment: the court gets discretion back

Two changes work together here.

“And” becomes “or”. The punishment moves from “imprisonment and fine” to “imprisonment or fine or both”. The court may impose a fine alone.

The floor is removed. The requirement of a minimum six months imprisonment under section 132(3) is being removed, again to confer discretion on the court.

The ceiling is also rationalised:

Amount involved	Maximum punishment
Exceeds ₹10 crore	Imprisonment up to five years, or fine, or both
Exceeds ₹5 crore but does not exceed ₹10 crore	Imprisonment up to two years, or fine, or both

The FAQ describes this as a rationalisation of the maximum term, and indicates that the ₹5 crore to ₹10 crore band comes down from three years to two. It does not restate the existing maxima in full, so the table above records only what the FAQ itself puts on the record.

Read together, a conviction no longer carries an automatic custodial sentence. That is what the word decriminalisation in the FAQ’s own title is doing.

The offences that shrink

Three descriptions in section 132(1) are cut back, and the stated reasoning is as useful as the change.

Clause (i) is omitted entirely. It related to the supply of services in contravention of the Act. The FAQ’s reason is candid: the offence was difficult to quantify and liable to subjective interpretation. That is an unusual admission in an official document, and it is the right one. An offence nobody can measure consistently is an offence that gets applied inconsistently.

Clause (e) loses “evades tax”. What remains is confined to fraudulently obtaining a refund. Evasion of tax is still dealt with elsewhere in the section and through the demand machinery; what goes is a broad overlapping description.

Clause (h) loses “or in any other manner deals with”. Only the specific acts listed in the clause remain. Catch-all wording of that kind is exactly what converts a targeted offence into a general one.

Clause (c) is redrafted to cover only the fraudulent availment of input tax credit without receipt of goods or services, or without an invoice. In other words, the fake invoice case, which is what the provision was aimed at, rather than any disputed credit claim.

That last one matters more than it looks. A great many credit disputes are genuine differences of view about eligibility. Narrowing clause (c) to credit taken without any underlying supply or invoice draws a line between a disagreement and a fraud.

What this does not change

The demand and recovery machinery is untouched by this item. Sections 73, 74 and 74A continue to operate, and tax, interest and penalty remain payable. The Council dealt with that side separately, including a minimum threshold of ₹10,000 below which no show cause notice is to issue, which we will cover on its own.
Investigation continues. Nothing here removes the department’s ability to investigate, summon, or demand.
Penalties continue. Decriminalisation is about criminal consequences, not about whether a penalty can be levied.

What to do now

Do not treat an ongoing matter as resolved. Until the amendment is enacted and notified, the present law applies in full, section 69 included.
Take the ₹5 crore figure as a prosecution threshold, not a safe harbour. Tax, interest and penalty are payable at any amount, and a demand below ₹5 crore is still a demand.
If a credit dispute has been framed against you as fraud, the redrafting of clause (c) is worth raising with your advisers, because the distinction between a disputed claim and credit taken without any invoice or supply is being written into the section.
Watch for the amendment, not the press coverage. This change needs legislation in Parliament and in the States. The date it takes effect is the date that matters.

How CSM & Co LLP can help

We can advise on your position in an ongoing GST investigation under the law as it currently stands, assess whether a demand framed under the fraud limb is properly characterised in light of the proposed redrafting of clause (c), handle representations and replies to show cause notices, and advise on voluntary payment and the conclusion of proceedings where that is the sensible route. Please reach out to our team and we will be happy to assist.

Frequently asked questions

Can I still be arrested under GST?

Once the amendment is enacted, no. The Council recommended removing the arrest provisions by omitting section 69 of the CGST Act, and the official FAQ states that no person shall be arrested for an offence under the GST law. Until the amendment is passed and notified, section 69 remains in force.

Does this mean GST offences are no longer punishable?

No. Prosecution can still be launched before the competent court on a complaint by the tax authorities where the amount involved exceeds ₹5 crore. What goes is the power to arrest, not the offence.

What is the prosecution threshold now?

₹5 crore, up from ₹1 crore. Prosecution under section 132(1) is to be launched only where the evaded tax amount exceeds that figure.

Will a convicted person definitely go to prison?

Not necessarily. The punishment changes from “imprisonment and fine” to “imprisonment or fine or both”, and the minimum six months imprisonment under section 132(3) is removed, so the court may impose only a fine.

What is the maximum imprisonment after the change?

Up to five years where the amount involved exceeds ₹10 crore, and up to two years where it exceeds ₹5 crore but does not exceed ₹10 crore, in each case with the option of a fine instead or as well.

Which offences are being narrowed?

Clause (i) of section 132(1) is omitted entirely. In clause (e) the words “evades tax” go, confining it to fraudulently obtaining a refund. In clause (h) the words “or in any other manner deals with” go, leaving only the specific acts listed. Clause (c) is redrafted to cover only fraudulent availment of input tax credit without receipt of goods or services or without an invoice.

Official sources

Disclaimer

57th GST Council Meeting (October 2026): Arrest Powers Removed, Faster Refunds and Wider ITC

Posted on October 9, 2026October 10, 2026 by CA Meet Dhrangadhariya

Last updated: 09 October 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

The GST Council met on 08/10/2026 and recommended withdrawing arrest powers under GST by omitting section 69 of the CGST Act, and raising the prosecution threshold from ₹1 crore to ₹5 crore.
Refunds move to system based processing, with 90% of zero rated and inverted duty refund claims sanctioned provisionally without an officer, and full automatic sanction of excess cash ledger balance.
Input tax credit opens up: blocked credit under section 17(5) is cut back on health and life insurance, outdoor catering, telecom towers and more, and accumulated credit on input services and capital goods becomes refundable.
Maximum general penalty under section 125 falls from ₹25,000 to ₹10,000, and no show cause notice will be issued where the tax involved is below ₹10,000.
Nothing here is law yet. Every item takes effect only through the notifications, circulars and amendments that follow, and some carry dates as far out as April 2027.

The GST Council held its 57th meeting in New Delhi on 08/10/2026, chaired by the Union Finance Minister. Where the 56th meeting last year dealt with rates, this one is about process: registration, returns, refunds and adjudication, together with a set of clarifications on how GST applies to particular goods and services.

The headline is a genuine shift in tone. The Council has recommended removing the power of arrest from the GST law altogether, raising the prosecution threshold five times over, cutting the maximum general penalty, and stopping small demand notices at source. Alongside that sits a serious attempt to make refunds move without an officer having to touch them.

One point before anything else. Every item below is a recommendation. The press release says so in terms: the decisions take effect through the relevant circulars, notifications and law amendments, and those alone have the force of law. Do not change a filing position, a credit claim or a contract on the strength of this post or of any news report about the meeting. Several items also carry their own start dates, one of them as far away as April 2027.

The meeting at a glance

Council: 57th meeting of the GST Council, New Delhi, 08/10/2026
Chaired by: Union Finance and Corporate Affairs Minister
Theme: process reforms covering registration, returns, refunds and adjudication, plus rate clarifications and trade facilitation
Official press release: Press Information Bureau, Release ID 2320934
GST portal advisory: Recommendations of the 57th GST Council Meeting, Key Reforms
Source announcements: Ministry of Finance and CBIC, both on 08/10/2026
Status: recommendations only, to be given effect by notification, circular or amendment

For context, the 56th Council meeting last year simplified the rate structure itself: two main rates of 5% and 18%, with a special 40% rate for selected goods and services. This meeting leaves rates alone and works on the machinery around them.

The main numbers that change

Item	Position today	Recommended
Arrest power under GST	Section 69 of the CGST Act	Section 69 to be omitted entirely
Prosecution threshold	₹1 crore	₹5 crore
Maximum general penalty, section 125	₹25,000	₹10,000
Show cause notice, minimum tax involved	No threshold	No notice below ₹10,000 (CGST, SGST, IGST and cess together)
Minimum penalty in non-fraud cases	₹10,000	Condition removed
Refund acknowledgement or deficiency memo	15 days	10 days, deemed acknowledged if not issued
Provisional refund, zero rated and inverted duty	Officer driven	90% sanctioned automatically on a system risk evaluation
Pre-deposit cap for appeal in penalty-only cases	Not stated in the press release	₹40 crore (₹20 crore CGST and ₹20 crore SGST or UTGST), for each of the Appellate Authority and the Tribunal

Arrest, prosecution and penalties

This is the part of the meeting that matters most to anyone who has ever had a GST summons land on their desk.

Arrest powers withdrawn. The Council recommended the complete withdrawal of arrest powers under GST by omitting section 69 of the CGST Act, 2017.
Prosecution threshold raised from ₹1 crore to ₹5 crore.
Narrowing of the offences in section 132. Clause (i) of section 132(1) is to be omitted, the words “evades tax” are to be deleted from clause (e), and the words “or in any other manner deals with” from clause (h). Clause (c) is to be narrowed so that it covers only the fraudulent availment of input tax credit without receipt of goods or services or without an invoice. The quantum of punishment for the various offences is to be rationalised.
General penalty under section 125 comes down from ₹25,000 to ₹10,000.
Small notices stop. No show cause notice under sections 73, 74 or 74A where the tax involved is less than ₹10,000. Notices and appeals already pending below that figure on the date the provision comes into force are to be decided as if the threshold had always applied.
Reduced penalty of 5% in non-fraud cases where the tax and interest are paid within 30 days of the adjudication order under section 73, or 60 days under section 74A. Where the full tax, interest and penalty are paid voluntarily within the specified time, the penalty is to be deemed a “charge”.
A ceiling on pre-deposit in penalty-only appeals. The provisos to section 107(6) and section 112(8) are to be amended to cap the pre-deposit at ₹40 crore (₹20 crore CGST and ₹20 crore SGST or UTGST) for an appeal to the Appellate Authority and to the Appellate Tribunal respectively, where the order carries only a penalty and no demand of tax.
Quality of notices. A circular is to give field officers comprehensive guidelines on the drafting and timing of demand notices and adjudication and appeal orders, on invoking fraud, wilful misstatement or suppression only on the merits of each case, and on observing natural justice, including personal hearings.

Refunds

Refunds move towards running themselves, in two phases.

Phase 1

Full refund of excess balance in the electronic cash ledger, sanctioned automatically by the system with no officer involved.
The window for an acknowledgement or a deficiency memo drops from 15 days to 10 days, and the application is deemed acknowledged if the officer issues neither within that time.
For zero rated supplies and the inverted duty structure, 90% of the amount claimed is sanctioned provisionally by the system, on the basis of a risk evaluation.

Phase 2

System generated acknowledgement after the system itself verifies the application.
In those acknowledged cases, automatic sanction of the full zero rated refund claim after adjusting any pending dues, again on a risk basis.

Supporting changes: FORM GST RFD-01 is to capture details in a machine readable format and scanned uploads go away for zero rated and inverted duty claims; the cap in rule 89(4)(C), which limits zero rated turnover of goods to 1.5 times the value of like goods supplied domestically, is to be removed; and section 54(14) is to be clarified so that the ₹1,000 minimum applies to the total refund across CGST, SGST or UTGST and IGST taken together. Section 115 is to be made a standalone provision for the rate of interest on refund of pre-deposit, with a circular to follow.

Input tax credit opens up

Blocked credit under section 17(5) is cut back. The Council recommended removing the restriction on credit for, among other things, outdoor catering, health and life insurance, telecommunication towers, pipelines laid outside factory premises, free samples, and goods destroyed or written off on expiry of shelf life where the law requires it.

Accumulated credit becomes refundable, with dates attached:

Type of credit	Where it applies	Available for credit availed on or after
Input services	Inverted duty structure refunds	01/11/2026
Capital goods	Zero rated and inverted duty refunds, spread over 60 months	01/04/2027

Limited credit in the same line of business is to be allowed for restaurant and outdoor catering services, hotel accommodation up to ₹7,500 per unit per day, and gym or fitness services, on the same footing as passenger transport, tour operator and motor vehicle renting services already enjoy.

Blocking of the credit ledger gets a hearing. Rule 86A is to be amended so that a taxpayer can object to an amount being blocked in the electronic credit ledger and be heard in person before the officer decides.

Registration

A comprehensive circular with FAQs will list exactly which documents and information a registration application needs, and FORM GST REG-01 gets drop boxes so both taxpayer and officer know what is expected.
Amendments become automatic. Rule 19 is to be amended so that changes to all registration particulars are accepted automatically on the portal, except the principal place of business. For taxpayers registered through the automatic route under rule 14A, even a change of principal place of business is accepted automatically.
Cancellation becomes automatic too. In phase 1, an application in FORM GST REG-16 is accepted automatically once all pending returns are filed and dues paid, where the taxpayer has never passed on credit above ₹2.5 lakh in a month, or has done so but filed FORM GSTR-10 in time. In phase 2 this extends to all cancellation applications. Suo motu cancellation gets a system based mechanism through amendments to rules 21, 21A and 22 and a new rule 23A.
Small e-commerce sellers get a simplified route. A new rule 14B will let a small supplier selling goods through an e-commerce operator register in a State where it has no physical presence by declaring the operator’s warehouse there as its principal place of business, where it does not intend to pass on credit above ₹2.5 lakh a month. Registration is granted automatically, subject to conditions.

Returns

The Council recommended a package to stop the mismatches that generate most automated notices: enhancements to FORM GSTR-1, 1A and IFF so they reconcile with GSTR-3B; a new rule 86D for an electronic statement of tax paid under reverse charge and credit claimed; a new rule 86C for an electronic credit reversal and reclaim statement; new sub-rules 61(1A) and 61(1B) to let liability and credit in GSTR-3B be corrected against GSTR-1 and GSTR-2B; a sub-rule 60(6A) covering the Invoice Management System, including how long a credit note may be kept pending; and an amendment to FORM GST DRC-03 so the underlying invoice is declared.

This package is to come into force from the return for April 2027, and the revised mechanism will first be put into the public domain for a time-bound consultation.

Late fee relief for small taxpayers. Late fee on a delayed return under section 39(1) is to be waived for taxpayers with turnover up to ₹5 crore in the preceding financial year, provided the return is filed by the end of the month in which it was due.

An annual return with quarterly payment. The Council gave in-principle approval to a concept note for an optional Annual Return Quarterly Payment scheme for taxpayers with turnover up to ₹5 crore who supply only to unregistered persons.

E-invoicing widens to domestic supplies received from unregistered persons under reverse charge and to the import of services, for taxpayers with turnover of ₹5 crore and above.

E-way bill and movement of goods

A conveyance can be intercepted only on specific intelligence and with the authorisation of an officer not below the rank of Joint Commissioner.
Inspection, detention or seizure only where either the supplier or the recipient is located or registered in the State where the interception happens. No interception in transit States.
Where no e-way bill was generated, or the vehicle carries no document showing the origin or destination of the goods, the goods can be inspected, detained or seized regardless of jurisdiction.
Confiscation under section 130 will not apply to goods or conveyances in transit.

Exports and zero rating

Sub-clause (v) of section 2(6) of the IGST Act is to be omitted, so a supply of services to or through a foreign branch or office of the same entity can qualify as an export of services.
Clause (a) of section 13(3) of the IGST Act is to be omitted, so where the recipient makes goods physically available to the supplier, the place of supply falls back to the location of the recipient under section 13(2).
An explanation to section 16(1) of the IGST Act will treat goods supplied to an overseas buyer but delivered to that buyer in an SEZ or FTWZ, paid for in convertible foreign exchange or in rupees where the RBI permits, as a supply to an SEZ or FTWZ.
A circular will clarify when payment in foreign exchange or in Indian rupees is acceptable for export of goods and services.

Rate and classification clarifications

On goods: sublimation paper falls under heading 4809; the toy entries cover all of heading 9503 and not only tricycles, scooters and pedal cars; seaweed extract based bio-stimulants registered under Schedule VI of the Fertiliser Control Order are fertilisers under heading 3101; dealers in second-hand vehicles under the margin scheme may take credit on spares, repairs, rent, marketing and similar inputs, the bar applying only to the tax on the vehicles themselves; psyllium seeds (isabgol) are nil rated whether fresh, chilled, frozen or dried; re-treaded tractor tyres are aligned with new tractor tyres. Waste and scrap of plastics, electrical and electronic waste, waste tyres and used cooking oil come under reverse charge when supplied by an unregistered person to a registered person, and a 2% TDS is introduced on business to business supplies of that scrap.

On services: a 5% option with restricted credit for passenger transport and rental of motor vehicles with operator where an electric vehicle is used and charging is in the price; delivery services other than courier and postal supplied through an e-commerce operator brought under section 9(5) at 5% without credit; clarification of recoveries such as registration charges, road tax, insurance and FASTag in motor vehicle leasing; exemption for seat-sharing helicopter transport to and from airports and helipads in the north-eastern States, Sikkim and Bagdogra; exemption for storage or warehousing of seeds meant for sowing, for curing of coffee, and for the Seamen’s Provident Fund Organisation; self-certification by the head of an institution for the research and development exemption; exemption for import of services without consideration by Indian establishments of foreign shipping lines; exemptions and a special valuation procedure for highway projects under the Toll Operate Transfer model; and a clarification that notional interest in bank fund transfer pricing entries is covered by the definition of interest.

A circular is also to confirm that the omission of rule 96(10) of the CGST Rules takes effect from 23/10/2017, following the Supreme Court decision, along with clarifications on the input service distributor mechanism, credit for banks and NBFCs opting for section 17(4), pre-deposits, and credit on demonstration vehicles.

Who this affects most

Exporters and anyone in an inverted duty structure. The 90% provisional refund, the removal of the 1.5 times cap in rule 89(4)(C), and refund of credit on input services and capital goods together change the working capital position materially. Watch the 01/11/2026 and 01/04/2027 cut-offs.
Businesses carrying blocked credit on insurance, catering, towers or pipelines. There may be a case to track that credit now so it is identifiable when the amendment arrives.
Anyone facing a small demand. The ₹10,000 notice threshold and the pending-case rule could close out a number of live matters.
Small sellers on e-commerce platforms, who may be able to drop State-wise registrations and physical premises.
Transporters and their customers, with interception restricted to intelligence-led, Joint Commissioner authorised stops.
Taxpayers below ₹5 crore turnover, through the late fee waiver and the proposed annual return with quarterly payment.

What to do now

Do not act on this as settled law. Wait for the notification or circular on any item you intend to rely on, and check its own effective date.
Track the two credit cut-offs. If you claim refunds under the inverted duty structure, your records need to separate credit on input services availed on or after 01/11/2026. For capital goods the date is 01/04/2027 and the refund runs over 60 months.
List your blocked credit under section 17(5) by head, so you can quantify the benefit when section 17(5) is amended.
Review live notices and appeals where the tax involved is under ₹10,000. If the threshold is enacted as recommended, those are to be decided as if it had always applied.
Prepare for the April 2027 return changes rather than being surprised by them, and take part in the consultation if your business has a stake in how the reconciliation mechanism works.
Check your e-commerce registrations if you hold registrations in States purely to sell through a platform warehouse.

How CSM & Co LLP can help

We can review your input tax credit register against the proposed changes to section 17(5) and tell you what is currently being written off that may become claimable, work out the refund position under the new provisional sanction route for exporters and inverted duty cases, and assess any pending notice or appeal against the proposed ₹10,000 threshold. For businesses selling through e-commerce platforms we can look at whether the simplified registration route will let you consolidate State registrations once rule 14B is notified. Please reach out to our team and we will be happy to assist.

Frequently asked questions

Are the 57th GST Council decisions in force now?

No. The Council only recommends. Each item becomes effective when the Centre and the States issue the notification, circular or amendment that gives it legal force, and the press release itself says those alone carry the force of law.

Have arrest powers under GST actually been removed?

The Council has recommended the complete withdrawal of arrest powers by omitting section 69 of the CGST Act, 2017. Until that amendment is passed and notified, section 69 remains on the statute book.

What is the new prosecution threshold under GST?

The Council recommended raising it from ₹1 crore to ₹5 crore, so prosecution under section 132 would be launched only above that amount, once notified.

Will I get my GST refund faster?

That is the intent. In the first phase a full refund of excess balance in the electronic cash ledger would be sanctioned automatically, and 90% of zero rated and inverted duty claims would be sanctioned provisionally by the system based on a risk evaluation, with the acknowledgement window cut from 15 days to 10 days.

Can I now claim input tax credit on health and life insurance?

The Council recommended amending section 17(5) to remove that restriction, along with outdoor catering, telecommunication towers, pipelines laid outside factory premises, free samples and goods written off on expiry of shelf life. It applies only once the amendment is notified.

When does refund of credit on capital goods start?

The Council recommended that it be spread over 60 months and be available only for credit availed on or after 01/04/2027. For input services under the inverted duty structure, the cut-off is credit availed on or after 01/11/2026.

Official sources

Disclaimer

Types Of Taxes In India: Direct Tax And Indirect Tax

Posted on May 13, 2026October 6, 2026 by CA Meet Dhrangadhariya

Last updated: 28 September 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

Taxes in India are direct (income tax, Securities Transaction Tax) or indirect (GST, customs duty, limited central excise, state VAT on petroleum and alcohol).
Direct taxes are borne by the person on whom they are levied; indirect taxes are passed on to the final consumer.
Wealth tax, gift tax and fringe benefit tax no longer exist, and GST replaced service tax, sales tax, state VAT on most goods and octroi.
The note compares both kinds with advantages, disadvantages and a difference table.

Taxes in India are broadly classified into direct taxes, such as income tax, and indirect taxes, such as GST and customs duty. Direct taxes are paid by the person on whom they are levied. Indirect taxes are included in the price of goods and services, and the burden passes to the final consumer. Knowing the types of taxes helps taxpayers comply with the law and plan their finances.

Types Of Taxes In India

Direct taxes are administered by the Central Board of Direct Taxes (CBDT). Indirect taxes (GST, customs and central excise) are administered by the Central Board of Indirect Taxes and Customs (CBIC).

Direct Taxes

A direct tax is levied on the income or profits of a person, who has to bear it and cannot pass it on to someone else. The main direct taxes in force are:

Income tax: charged on the income of individuals, HUFs, firms, companies and other persons. Capital gains tax is part of income tax. Surcharge and the 4% health and education cess are added on top of income tax.
Securities Transaction Tax (STT): charged on specified transactions in listed securities. It is a direct tax collected at the time of the transaction.

Several direct taxes that older books still list no longer exist: wealth tax (abolished from AY 2016-17), gift tax (abolished in 1998; gifts above the prescribed limit are now taxed as income) and fringe benefit tax (abolished from AY 2010-11).

Indirect Taxes

An indirect tax is charged on goods and services. It is collected by the seller and the burden is passed on to the end consumer. The main indirect taxes in force are:

Goods and Services Tax (GST): a single tax on the supply of goods and services, in force since 1 July 2017. It replaced service tax, central excise on most goods, state VAT on most goods, central sales tax, octroi and entry tax, and removed the cascading effect.
Customs duty: charged on goods imported into India.
Central excise duty: now limited to a small set of goods, mainly petroleum products.
State VAT: still levied by states on petrol, diesel and alcohol for human consumption.

Other levies

Some levies are neither central direct nor indirect taxes: property tax (local municipal), stamp duty and registration fees (state), and professional tax (state, capped at Rs 2,500 a year under the Constitution). A toll is a fee for using a road, not a tax.

Direct taxes	Indirect taxes	Other levies
Income tax (including capital gains)	GST	Property tax
Securities Transaction Tax	Customs duty	Stamp duty and registration fees
	Central excise (limited goods)	Professional tax
	State VAT (petroleum, alcohol)	Toll (a fee)

Advantages And Disadvantages Of Direct Tax

Advantages	Disadvantages
Progressive in nature: people with lower incomes pay less tax than people with higher incomes.	Some taxpayers evade or avoid tax.
Helps reduce income inequality.	Compliance and documentation can be complex and time-consuming.
Certainty: the government and the taxpayer both know what is to be paid and when.	The burden cannot be transferred to anyone else.

Advantages And Disadvantages Of Indirect Tax

Advantages	Disadvantages
Everyone who spends contributes to nation-building.	Raises the overall price of goods and services.
Easy to collect from the end consumer.	Consumers often do not know how much tax they pay.
Lower rates can be applied to essential goods and higher rates to luxury goods.	Regressive in nature, as it takes a larger share of low incomes.
The burden can be passed to the end consumer.	Revenue is hard to predict because it depends on what people buy.

Difference Between Direct Tax And Indirect Tax

Basis	Direct Tax	Indirect Tax
Definition	Tax levied directly on the income or profits of a person.	Tax levied on the supply of goods and services.
Burden of Tax	Cannot be shifted; borne by the person on whom it is imposed.	Can be shifted; ultimately borne by the end consumer.
Governing Body	Central Board of Direct Taxes (CBDT).	Central Board of Indirect Taxes and Customs (CBIC).
Examples	Income tax, Securities Transaction Tax.	GST, customs duty, central excise.
Impact on Prices	Does not directly affect the price of goods and services.	Forms part of the price of goods and services.
Payment	Paid directly to the government by the taxpayer.	Collected by the seller or service provider and paid to the government.

Now that you know the main types of taxes in India, it is easier to see which ones apply to you.

Frequently asked questions

What are the two main types of taxes in India?

Direct taxes, such as income tax, which are paid by the person on whom they are levied, and indirect taxes, such as GST and customs duty, which are passed on to the final consumer.

Is wealth tax still charged in India?

No. Wealth tax was abolished with effect from AY 2016-17. Gift tax was abolished in 1998 and gifts above the prescribed limit are now taxed as income.

Which taxes did GST replace?

GST replaced service tax, central excise on most goods, state VAT on most goods, central sales tax, octroi and entry tax.

Who administers direct and indirect taxes?

Direct taxes are administered by the Central Board of Direct Taxes (CBDT) and indirect taxes such as GST, customs and central excise by the Central Board of Indirect Taxes and Customs (CBIC).

Official sources

Disclaimer

GST Gets Simpler: Key Rate Changes from Sept 2025

Posted on September 3, 2025September 3, 2025 by CA Meet Dhrangadhariya

How the New GST Rate Changes Will Impact Businesses (w.e.f. 22nd Sept 2025)

56th GST Council Meeting, held in September 2025, has introduced significant changes to GST rates across various goods and services. These revisions aim to simplify compliance, reduce burden on essential items, and ensure higher taxation on luxury and sin goods. Let’s break down the impact for businesses and consumers.

Key GST Rate Changes

Nil Rate (0%)

Individual Health & Life Insurance
Educational Supplies: Pencils, notebooks, erasers, maps etc.

➡ Relief for households and students, encouraging affordability in health and education.

5% GST

Daily Essentials: Dairy, snacks, personal care, kitchenware, baby products, sewing supplies
Medical & Agricultural Supplies

➡ This keeps household and farming necessities affordable while maintaining tax revenues.

18% GST

Automobiles: Cars, motorcycles, three-wheelers, transport vehicles
Electronic Appliances: Air conditioners, large TVs, monitors, projectors, dishwashers

➡ Common in mid-range consumption, this rate continues to balance revenue and accessibility.

40% GST

Tobacco & Sin Goods, Aerated Drinks
Luxury Cars, High-end Motorcycles, Personal Aircraft & Vessels

➡ Heavier taxation on luxury and harmful products to discourage over-consumption and generate revenue.

Compliance & Business Ease Measures

Apart from rate changes, the Council announced key reforms:

Auto-registration within 3 days for taxpayers with ITC claims below ₹2.5 lakhs/month
Faster refunds for exports & inverted duty supplies through smart system checks
GSTAT Appeals to commence from December 2025 for quicker dispute resolution

What This Means for Businesses

Manufacturers & Traders in FMCG, agriculture, and medical supplies benefit from lower rates.
Automobile & Electronics Sectors remain at 18%, ensuring stability.
Luxury & Tobacco Industries face a steeper 40% rate, requiring pricing adjustments.
Exporters & MSMEs gain from faster refunds and easier registration.

Conclusion

The latest GST changes mark a step toward a more equitable and simplified tax structure. Essentials have been made more affordable, while luxury and sin goods will contribute more revenue. Businesses must realign their pricing, compliance, and invoicing systems before 22nd September 2025 to stay fully compliant.

Read the source of this post by clicking here (Recommendations of the 56th Meeting of the GST Council held at New Delhi)

Disclaimer:

GST Registration Field Visit Guide for Drop-Shipping & E-commerce Sellers

Posted on July 19, 2025July 24, 2025 by CA Meet Dhrangadhariya

GST Field Visit Guide for E-Commerce Sellers Without Inventory at Home

If you’re an e-commerce seller operating on platforms like Amazon, Flipkart, Meesho, or others—and you don’t store any products at your home address—getting a visit from a GST officer can feel confusing or intimidating.

But don’t worry: field visits are a normal part of the GST registration process, especially when your home is listed as your principal place of business. Here’s exactly what to expect and how to respond confidently and correctly during the verification process.

Why a GST Field Visit Happens

The field visit is meant to verify the existence and legitimacy of your business at the declared address. The officer is not there to harass you, but simply to check:

Whether the address is valid
If business activities are happening from the location
That your documents are genuine

Common Questions Asked — With Sample Answers

What is the nature of your business?

Answer: “I sell clothing (or your product) online through platforms like Amazon, Flipkart, and Meesho.”
Why is your home listed as your business address?

Answer: “I operate the business digitally from home for documentation and compliance purposes. No physical inventory is stored here.”
Where is your stock stored?

Answer: “I don’t stock goods at home. I use a drop-shipping model—suppliers ship products directly to customers.”
Can you show any business setup (e.g., devices or tools used)?

Answer: “Yes, I can show my laptop, mobile, email confirmations, platform dashboards, and order management system.”
Do you have documents related to your suppliers or products?

Answer: “Yes. I maintain supplier contracts, e-commerce platform registrations, and digital copies of invoices and orders.

Documents to Keep Ready

Make sure you have the following documents available (digitally or physically):

PAN & Aadhaar Card
Recent utility bill for address proof
GST application acknowledgment
E-commerce platform registration confirmation (email/screenshot)
Sample order or invoice from your portal
Supplier details or agreement (if applicable)

Important Compliance Tips

Ensure your documents match the GST application exactly—especially address and name.
Clarify that your home is only for communication, not for stocking goods.
Remain calm, honest, and cooperative with the officer.
Keep a clean, professional digital trail of orders, invoices, and platform communications.

You are operating a 100% legitimate e-commerce business under the drop-shipping model. GST law fully supports this approach as long as you:

File your GST returns on time
Maintain proper digital records
Provide truthful responses during verification

Display a Business Name Board at Your Address

Before the GST officer visits, it’s highly recommended to fix a nameplate or board with your business name at a visible location—such as the entrance, main door, or gate of your home. This small step significantly increases the chances of successful verification, as it visibly establishes that your home address is being used for official business correspondence. The board should ideally mention:

Your GST-registered business name
Your GSTIN or “Registered Office” label

This shows the officer that your business is active and traceable at the registered address—even if no stock is stored there.

Final Thoughts

GST field visits can sound intimidating, but with a little preparation and honesty, they’re usually quick and straightforward. As a modern online seller, your business setup is different—but completely valid.

Be transparent, stay compliant, and your GST registration will go through smoothly.

Disclaimer:

Advisory on HSN Validations in Table 12 of GSTR-1

Posted on February 24, 2025March 30, 2025 by CA Meet Dhrangadhariya

Advisory on HSN Validations in Table 12 of GSTR-1

The Goods and Services Tax (GST) authorities have issued an advisory detailing the implementation of Phase-3 for reporting Harmonized System of Nomenclature (HSN) codes in Table 12 of GSTR-1 and GSTR-1A, effective from the February 2025 return period. This phase introduces significant changes to enhance the accuracy and consistency of HSN code reporting for taxpayers.

Key Changes in Phase-3:

1. Mandatory Selection from Dropdown:

• Taxpayers with Aggregate Annual Turnover (AATO) up to ₹5 crore: Required to report 4-digit HSN codes for goods and services.

• Taxpayers with AATO exceeding ₹5 crore: Required to report 6-digit HSN codes for goods and services.

Turnover	HSN Digits
Upto 5 crores	Mandatory 4-digit HSN codes
More than 5 crores	Mandatory 6-digit HSN codes

Manual entry of HSN codes is now restricted. Taxpayers must select the appropriate HSN code from a predefined dropdown list. Upon selection, a customized description from the HSN master will auto-populate in a new field labeled “Description as per HSN Code.”

2. Validation of Supply Values:

• The system will validate the values of Business-to-Business (B2B) and Business-to-Consumer (B2C) supplies reported in various tables against the values in Table 12.

• Initially, these validations will operate in a warning mode, allowing taxpayers to file GSTR-1 even if discrepancies are detected. However, if B2B supplies are reported in other tables, the B2B tab in Table 12 cannot be left empty.

In Table-12 validation with regards to value of the supplies have also been introduced.

1) These validations will validate the value of B2B supplies shown in different Tables viz: 4A, 4B, 6B, 6C, 8 (recipient registered), 9A, 9B (registered), 9C (registered), 15 (recipient registered), 15A (recipient registered) with the value of B2B supplies shown in table-12.

2) Similarly, validations will validate the value of B2C supplies shown in different tables viz: 5A, 6A, 7A, 7B, 8 (recipient unregistered), 9A (export), 9A (B2CL), 9B (unregistered), 9C (unregistered), 10, 15 (recipient unregistered), 15A (recipient unregistered) with the value of B2C supplies shown in Table-12.

3) In case of amendments, only the differential value will be taken for the purpose of validation.

3. Enhancements in Table 12:

• Segregation of Supplies: Table 12 is now divided into two tabs: “B2B Supplies” and “B2C Supplies.” Taxpayers must enter HSN summary details separately under each tab.

• Downloadable HSN Code List: A new “Download HSN Codes List” button allows taxpayers to download an Excel file containing the updated list of HSN and SAC codes along with their descriptions.

• Searchable “Product Name as in My Master”: This feature enables taxpayers to search and select descriptions from their HSN master. Upon selection, the corresponding HSN code, description, Unit Quantity Code (UQC), and quantity will auto-populate. This functionality is optional.

Conclusion:

These changes aim to streamline the HSN reporting process, reduce errors, and ensure compliance with GST regulations. Taxpayers are advised to familiarize themselves with these updates and adjust their reporting processes accordingly to ensure a smooth transition.

For a detailed understanding, refer to the official advisory issued by the GST authorities by clicking here.

A Comprehensive Guide to GST Registration and Required Documents

Posted on February 12, 2025March 1, 2025 by CA Meet Dhrangadhariya

A Comprehensive Guide to GST Registration and Required Documents

In today’s business landscape, Goods and Services Tax (GST) registration is essential for businesses to operate legally and efficiently. GST is a unified indirect tax that has streamlined taxation across India, eliminating multiple state and central levies. If your business meets the eligibility criteria, obtaining GST registration is mandatory. In this blog, we will discuss the significance of GST registration, the eligibility criteria, and the documents required for a smooth registration process.

What is GST Registration?

GST registration is the process of obtaining a unique GST Identification Number (GSTIN) from the tax authorities. It enables businesses to collect GST from customers and claim input tax credits on purchases. A GST-registered entity must comply with tax regulations, including timely returns filing and tax payments.

Who Needs to Register for GST?

Businesses and individuals are required to register for GST under the following conditions:

Turnover Criteria: Businesses with an annual turnover exceeding Rs. 40 lakh (for goods) and Rs. 20 lakh (for services) must register for GST. In special category states, the threshold is Rs. 10 lakh.
Interstate Business: Any business involved in interstate supply of goods or services must register for GST, regardless of turnover.
E-commerce Operators: Businesses selling through e-commerce platforms like Amazon, Flipkart, or their own online store must register for GST.
Casual Taxable Persons: Businesses operating on a temporary basis, such as seasonal businesses or event-based sellers, must obtain GST registration.
Voluntary Registration: Any business can opt for voluntary GST registration to avail input tax credit and enhance market credibility.

Documents Required for GST Registration

The required documents for GST registration vary based on the type of business entity. Here’s a detailed list:

1. Sole Proprietorship

PAN card of the proprietor
Aadhaar card of the proprietor
Passport-sized photograph
Bank account details (cancelled cheque or bank statement)
Business address proof (electricity bill, rent agreement, NOC from owner, etc.)

2. Partnership Firm

PAN card of the firm
Partnership deed
PAN and Aadhaar of all partners
Passport-sized photographs of partners
Bank account details
Business address proof

3. Private Limited Company / LLP / Public Limited Company

PAN card of the company
Certificate of incorporation issued by MCA
Memorandum of Association (MoA) and Articles of Association (AoA)
PAN and Aadhaar of directors
Digital Signature Certificate (DSC) of an authorized signatory
Board resolution authorizing GST registration
Business address proof
Bank account details

4. Hindu Undivided Family (HUF)

PAN card of HUF
Aadhaar of Karta
Passport-sized photograph of Karta
Bank account details
Business address proof

How to Apply for GST Registration?

The GST registration process is straightforward and can be completed online through the GST portal. Follow these steps:

Visit the official GST portal (https://www.gst.gov.in/).
Click on “New Registration” and fill in the required details.
Upload the necessary documents as per your business structure.
Verify with an OTP sent to your registered mobile number and email.
Receive the Application Reference Number (ARN) for tracking.
After verification by tax authorities, the GSTIN is issued.

Conclusion

GST registration is a crucial step for businesses to ensure compliance with tax laws and take advantage of input tax credits. Having the right documents ready can help streamline the process. If you need assistance, consulting a tax expert can help you navigate the registration process efficiently.

For more business-related tax updates, stay tuned to our blog!

Disclaimer:

When you can apply for cancellation

The 30 day rule

How to apply, step by step

What must be clear before you apply

Automatic acceptance: what changes

Cancellation by the department, and getting the registration back

While you are at it: the registration side is changing too

Common mistakes we see

What to do now

How CSM & Co LLP can help

Frequently asked questions

Official sources

Related reading

Disclaimer

Where and how to apply

The documents problem, and what is being done about it

Proof of principal place of business

Amendments: core and non-core, and what just moved

Changing the legal name

Adding an additional place of business

Changing the principal place of business on a normal registration

How this connects to the rest of the registration lifecycle

Practical points

What to do now

How CSM & Co LLP can help

Frequently asked questions

Official sources

Related reading

Disclaimer

The two phases

The clock, and the forms

What “low risk” buys you, and who does not get it

Deficiency memos: the trap that resets everything

Net ITC widens: input services and capital goods

The point most people will get wrong

Other restrictions that still apply

Interest, when things run late

Filing: what the system will and will not do for you

How to keep your claim on the automated track

What to do now

How CSM & Co LLP can help

Frequently asked questions

Official sources

Related reading

Disclaimer

What is changing, in one view

Arrest goes, prosecution stays

Punishment: the court gets discretion back

The offences that shrink

What this does not change

What to do now

How CSM & Co LLP can help

Frequently asked questions

Official sources

Disclaimer

The meeting at a glance

The main numbers that change

Arrest, prosecution and penalties

Refunds

Input tax credit opens up

Registration

Returns

E-way bill and movement of goods

Exports and zero rating

Rate and classification clarifications

Who this affects most

What to do now

How CSM & Co LLP can help

Frequently asked questions

Official sources

Disclaimer

Types Of Taxes In India

Direct Taxes

Indirect Taxes

Other levies

Advantages And Disadvantages Of Direct Tax

Advantages And Disadvantages Of Indirect Tax

Difference Between Direct Tax And Indirect Tax

Frequently asked questions

Official sources