57th GST Council: Arrest Powers Scrapped, Prosecution Threshold Hiked to ₹5 Crore

On October 8, 2026, the 57th GST Council recommended scrapping arrest powers, raising the prosecution threshold to ₹5 crore, cutting the general penalty to ₹10,000, and easing registration, amendments, and cancellations. It also proposed late fee relief for small taxpayers, e‑way bill checks by authorisation, and an optional ARQP scheme. These are recommendations; watch for notifications.

For CAs and finance students, the shift is immediate in advisory terms, not in law. Build client notes that flag decriminalisation, refund automation, and documentation hygiene, while stating “effective on notification.” The Prime Minister called the package “a significant step” toward a simpler, citizen‑friendly GST, underscoring policy intent.

57th GST Council: Arrest powers scrapped, prosecution at ₹5 crore—client impact

The Council proposed omitting section 69 to remove arrest powers. It raised the prosecution trigger from ₹1 crore to ₹5 crore, narrowed section 132 to focus on fraudulent input tax credit without supply, and cut the maximum general penalty to ₹10,000. Cap pre‑deposits in penalty‑only appeals at ₹40 crore, and re‑assess litigation strategy.

57th GST Council: Late fee relief and ARQP—who qualifies, what to advise

Late fee is proposed waived for taxpayers with turnover up to ₹5 crore if the GSTR‑3B is filed by month‑end of its due month. The Council also approved, in‑principle, an optional Annual Return Quarterly Payment (ARQP) scheme for B2C suppliers up to ₹5 crore turnover. Prepare eligibility screens, cash flow calendars, and SOPs, but mark “await notification.”

57th GST Council: ITC, ISD and rule 86A hearing—what changes next

Expect circulars on Input Service Distributor use, section 17(4) for banks and NBFCs, demonstration vehicles, pre‑deposits, and the Supreme Court‑aligned omission of rule 96(10) from October 23, 2017. Refund of accumulated ITC on input services starts for credits availed on or after November 1, 2026; capital goods refunds from April 1, 2027, spread over 60 months. Rule 86A adds a hearing opportunity.

57th GST Council: E‑way bill enforcement, notices and return fixes—operational takeaways

Interception would require specific intelligence and authorisation by a Joint Commissioner; no checks in pure transit states, with exceptions for missing documents. A minimum ₹10,000 threshold for show cause notices, reduced non‑fraud penalties, and common notice standards are proposed. Return correction tools—IMS and electronic reversal/reclaim statements—are targeted from April 2027 returns, post consultation.

57th GST Council: Registration and cancellation made simpler—SOP updates

Automatic acceptance of most registration amendments is proposed, plus system‑based cancellation and revocation once dues and returns are cleared. A new rule 14B would simplify registration for small e‑commerce sellers using declared warehouses as principal place. Update KYC and change‑control SOPs, and brief clients on likely e‑invoicing for specified reverse‑charge and import‑of‑service cases above ₹5 crore turnover.

Action for students and CAs: publish client advisories now, with a live tracker for effective dates—November 1, 2026 and April 1, 2027 milestones, and any notified rollouts. Rehearse updated notice responses, refund packs, and registration workflows. Monitor CBIC and State notifications closely, because the October 8 decisions remain recommendations until formally notified.