Tag: 57th GST Council

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

Posted on 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

  1. Log in to the GST portal with your own credentials.
  2. Go to Services, then Registration, then Application for Cancellation of Registration, which opens FORM GST REG-16.
  3. Enter the reason for cancellation, the date from which cancellation is sought, the details of closing stock, and any tax liability on that stock.
  4. Verify with a Digital Signature Certificate or an Electronic Verification Code and submit.
  5. 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

  1. 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.
  2. Reconcile GSTR-1 against GSTR-3B for every period before you apply, because the automated route depends on it.
  3. Work out the closing stock and the credit on it before you fill in the form, not inside it.
  4. Diarise the 180 days from the date of any system cancellation.
  5. 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

Related reading

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 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:

  1. File FORM GST REG-14 with the proof of principal place of business listed against FORM GST REG-01.
  2. No discrepancy: the proper officer approves within 15 days of the application.
  3. Discrepancy: the officer issues a show cause notice within 15 days of the application.
  4. You reply within 7 working days of the notice being issued.
  5. 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

  1. Wait for the circular before relying on the fixed document list or on an officer being unable to ask for more.
  2. 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.
  3. 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.
  4. 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

Related reading

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

Posted on 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.

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

What to do now

  1. 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.
  2. 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.
  3. 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.
  4. Reconcile the refund application against the returns before filing, not after a deficiency memo.
  5. Check whether your inversion is genuine on the inputs against outputs test before counting on the wider Net ITC.
  6. 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

Related reading

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

Posted on 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

  1. Do not treat an ongoing matter as resolved. Until the amendment is enacted and notified, the present law applies in full, section 69 included.
  2. 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.
  3. 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.
  4. 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

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.