The GST Council held its 57th meeting on 8 October 2026 in New Delhi. Union Finance Minister Nirmala Sitharaman chaired it. This meeting was not about tax rates, which were the subject of the 56th meeting. The focus this time was on process reforms in registration, returns, refunds and adjudication. Adjudication is the process by which tax officers decide disputes.
For shop owners and traders, five recommendations stand out. The Council proposed removing arrest powers, raising the prosecution threshold, cutting penalties and setting a minimum amount for show cause notices. A show cause notice asks you to explain why tax or a penalty should not be charged. The Council also proposed a late-fee waiver for taxpayers with turnover up to ₹5 crore.
One caution before you read further: all of these are only recommendations. They get the force of law only when the relevant law amendment, notification or circular is issued. Until then, the current GST rules still apply to your business.
57th GST Council meeting decisions at a glance: what changed and what is still pending
The official release calls every decision from the 57th meeting a recommendation. A recommendation is advice from the GST Council. It takes effect only through a law amendment, a notification or a circular. Only those documents have the force of law.
So for now, the current position in the table below still applies to your business.
| Topic | Current position | Recommended change | Status |
|---|---|---|---|
| Arrest powers | Section 69 of the CGST Act, 2017 gives arrest powers and still applies | Delete section 69 to remove arrest powers completely | Recommendation: awaiting law amendment/notification |
| Prosecution threshold (amount for a criminal case in court) | Generally more than ₹2 crore; ₹1 crore for fake-invoice offences (invoices issued without supplying goods or services) | A single ₹5 crore threshold | Recommendation: awaiting law amendment/notification |
| Maximum general penalty under section 125 | Up to ₹25,000 | Up to ₹10,000 (a maximum, not a fixed amount) | Recommendation: awaiting law amendment/notification |
| Show cause notice minimum (a notice asking you to explain a tax demand) | Section 74A (FY 2024-25 onwards): no notice if tax is below ₹1,000 in a financial year. Sections 73/74: no minimum amount. | No notice where total tax (CGST + SGST + IGST + Cess) is below ₹10,000 | Recommendation: awaiting law amendment/notification |
| Late fee on delayed section 39(1) return | Late fee applies | Waived for turnover up to ₹5 crore in the preceding financial year, if filed by the end of the month in which it was due | Recommendation: awaiting law amendment/notification |
Keep checking the latest GST updates and announcements. Rely only on the final notified text, because the details may differ from the recommendation. If you have a pending notice or case, speak to your CA or tax lawyer.
Can GST officers still arrest a business owner after the 57th GST Council meeting?
Yes, for now. The GST Council recommended removing arrest powers under GST completely. It plans to do this by deleting section 69 of the CGST Act, 2017. Section 69 is the part of the central GST law that allows officers to arrest a person.
But this is still only a recommendation. The official release says the Council's decisions take effect only through law amendments, notifications or circulars. Until the law is actually amended and section 69 is deleted, the arrest power remains.
So what does the current power look like? According to news reports after the meeting, GST officers can arrest a person in cases of major offences after prior authorisation from a Commissioner-level officer. This detail comes from media reports, not from the official release. Check the GST portal or ask your CA for the exact current position.
What this means for you
The change is welcome news for honest traders. However, it is not law yet. Do not assume you are protected from arrest today.
If you face a serious GST inquiry, do not rely on the Council's recommendation. Speak to your CA or a tax lawyer quickly. They can check your case against the law as it stands today.
GST Council recommends raising the prosecution threshold to Rs 5 crore: what it means
The Council recommended raising the money threshold for GST prosecution to a single ₹5 crore. This is still only a recommendation. It needs an amendment to the law before it has any effect.
Prosecution means criminal proceedings in a court. It is separate from an ordinary tax demand or penalty, where you are asked to pay money. A higher threshold means smaller cases would stay outside criminal proceedings once the change becomes law.
For example, say the amount involved in a case is ₹3 crore. That is above today's ₹2 crore limit for most offences. Under the recommended ₹5 crore limit, it would fall below the threshold. Today, prosecution generally applies only where the amount is more than ₹2 crore. For fake-invoice offences (invoices issued without supplying goods or services), the limit is ₹1 crore. The Council has recommended a single ₹5 crore threshold, but the current limits apply until the law is amended.
The Council also recommended narrowing section 132 of the CGST Act, which lists GST offences. Clause (c) of section 132(1) would cover only fraudulent availing of input tax credit (ITC) without receiving the goods or services, or without an invoice or bill. ITC is the GST you paid on purchases, which you set off against the GST you owe. Clause (i) of section 132(1) would be deleted, and punishments for the various offences would be rationalised.
The official release does not say whether the new threshold will apply to prosecution cases that are already pending. If you have a pending case, wait for the actual amendment text. Take advice from your CA or tax lawyer before you decide anything.
Lower GST penalties and the Rs 10,000 minimum for show cause notices
The Council also recommended smaller penalties and fewer notices for small amounts. A show cause notice is a letter from the GST department. It asks you to explain why tax, interest or penalty should not be charged. These changes are only recommendations. They will take effect only through law amendments, notifications or circulars.
- Lower maximum general penalty: Under section 125 of the CGST Act, 2017, the maximum general penalty would fall from ₹25,000 to ₹10,000. This is the upper limit, not a fixed amount for every case.
- ₹10,000 minimum for notices: Sections 73, 74 and 74A would be amended. No notice would be issued where the total tax (CGST + SGST + IGST + Cess) is less than ₹10,000. Example 1: CGST ₹3,000 + SGST ₹3,000 = ₹6,000, so no notice once the change is in force. Example 2: CGST ₹6,000 + SGST ₹6,000 = ₹12,000. This is above the limit, so a notice can still be issued.
- Pending small cases: Some notices and appeals involving less than ₹10,000 may still be pending when the limit starts. These would be decided as if the limit had applied when the notice was issued. The release does not say the lower penalties apply to old cases.
- 5% penalty in non-fraud cases: The adjudication order is the officer's final decision on a notice. The penalty would drop to 5% if you pay the tax and interest within 30 days of this order (section 73 cases) or within 60 days (section 74A cases).
- No ₹10,000 minimum penalty in non-fraud cases: This minimum would be removed. The penalty would be treated as a 'charge' if you pay the full tax, interest and penalty on your own within the set time limit.
If you have a pending notice or appeal, speak to your CA before you act.
GST late fee waiver for taxpayers with turnover up to Rs 5 crore: who qualifies
A late fee is a fixed charge you pay when you file a GST return after its due date. The Council recommended waiving the late fee on a delayed return under section 39(1) of the CGST Act, 2017. This is for taxpayers whose annual turnover in the preceding financial year was up to ₹5 crore. If you are not sure of your figure, see how annual aggregate turnover is worked out.
There is one condition. You must file the return by the end of the same month in which it was due.
- A trader had ₹3 crore turnover last year. They file a few days late but within the same month. The waiver would apply once it is notified. The waiver covers only the late fee. Interest on any tax paid late is still payable.
- The same trader files in the following month. The waiver would not apply.
- A trader had ₹6 crore turnover last year. They would not qualify at all.
This waiver is not in force yet. Until the government issues the notification, the current late fee rules apply. The official release also says nothing about returns already filed late or about refunds of late fees already paid.
In a related step, the Council approved in principle a concept note for an optional Annual Return Quarterly Payment (ARQP) scheme. It is meant for taxpayers with aggregate turnover of ₹5 crore or less in the preceding financial year who sell only to unregistered buyers (B2C, or business-to-consumer, sales). Details are yet to come.
What small businesses should do now: a practical checklist
Only notifications, circulars or law amendments give these decisions legal force. Until then, use this checklist.
- Follow the current rules. Treat every item as pending until it is notified.
- Check last year's turnover. This tells you whether the ₹5 crore limits would apply to you.
- File returns on time. If you are late, try to file within the same month.
- List pending notices and appeals. Note the tax in each one, adding CGST, SGST, IGST and Cess together.
- Talk to your CA. Once the amendments are out, discuss any pending notice or prosecution matter.
- Reconcile purchases. Back every input tax credit (ITC, the GST you paid on purchases) claim with actual receipt of goods or services and a proper invoice.
Other process changes to watch
- E-way bill checks: An e-way bill is the electronic document needed to move goods. A vehicle could be stopped only on specific intelligence and with authorisation from an officer not below Joint Commissioner rank.
- Return corrections: A new way to make GSTR-3B match GSTR-1/1A/IFF and GSTR-2B is proposed from the April 2027 return, after public consultation.
- E-invoicing: Notified on 26 October 2026 (Notification No. 04/2026–Central Tax). From 1 January 2027, businesses already required to e-invoice (aggregate turnover above ₹5 crore) must also e-invoice reverse-charge purchases (where the buyer pays the GST) from unregistered persons and import of services.
ValueSoft GST billing and return filing software gives GSTR-1 and GSTR-3B ready reports straight from your bills. Its GSTR-2B reconciliation software matches purchase bills with GSTR-2A/2B. This helps you file on time and spot ITC mismatches before you file GSTR-3B.
The Road Ahead for Traders
The 57th GST Council meeting points to a lighter, less punitive GST system for small businesses. The recommendations cover removing arrest powers and raising the prosecution threshold to ₹5 crore. They also cover smaller penalties, no show cause notices for amounts below ₹10,000, and a late fee waiver for taxpayers with turnover up to ₹5 crore.
But all of these are still only recommendations. Until the law is amended and notifications are issued, the current rules on arrest, prosecution, penalties and late fees still apply. The best preparation is simple: file returns on time, keep your records reconciled, track your turnover and pending notices, and check official GST updates for the final notified text. If you have a pending notice or case, speak to your CA or tax lawyer. If you would like to see ValueSoft in action, you can book a free demo on kalasoftech.com.
Frequently asked questions
When do the 57th GST Council decisions take effect, and do they need a law change or notification first?
The decisions of the 57th meeting, held on 8 October 2026, are recommendations. They take effect only through the relevant circulars, notifications or law amendments, and only those have the force of law. Removing arrest powers, the Rs 5 crore prosecution threshold and the lower Rs 10,000 maximum general penalty all still await a law amendment. A few items have their own start points, such as the new GSTR-3B correction mechanism from the April 2027 return and inverted duty refunds of ITC on input services availed on or after 1 November 2026.
If I already have a pending GST notice or prosecution case, does the new threshold help me?
For small demands, it may. The Council recommended that notices and appeals involving less than Rs 10,000 that are still pending when the new threshold starts be decided as if the Rs 10,000 threshold had applied when the notice was issued. The official release does not say whether the higher Rs 5 crore prosecution threshold will apply to cases already pending, so check the final law amendment or speak to your tax adviser.
Is the GST late fee waived for returns I filed late, and which returns and periods are covered?
The Council recommended waiving the late fee on a delayed return under section 39(1) of the CGST Act, 2017 for taxpayers whose annual turnover in the preceding financial year was up to Rs 5 crore. The waiver applies only if the return is filed by the end of the month in which it was due. The release does not name the tax periods covered or say whether returns already filed late qualify, so wait for the official notification before assuming any late fee is waived.
How much lower are GST penalties now, and do the lower penalties apply to old pending cases?
The Council recommended cutting the maximum general penalty under section 125 of the CGST Act from Rs 25,000 to Rs 10,000. In non-fraud cases, it also recommended removing the Rs 10,000 minimum penalty and a lower 5% penalty if tax and interest are paid within 30 days of the adjudication order in section 73 cases or within 60 days in section 74A cases. These are still recommendations, and apart from pending notices and appeals under Rs 10,000, the release does not say whether they will apply to older pending cases.
Sources
This article is for general information. GST rules change from time to time: check the GST portal or ask your CA before acting on it.
