Proposed changes would ease registration, accelerate inverted-duty refunds and curb officials’ discretion, while reshaping penalties, inspections and input tax credit blocking.
India’s GST regime is poised for another round of procedural changes, with the GST Council proposing measures designed to make registration easier, speed up refunds and cut down on discretion by tax officials. According to the Free Press Journal, the proposed changes would automate parts of the registration and amendment process, while also accelerating refunds in cases involving inverted duty structures, a system in which tax paid on inputs is higher than the tax collected on final sales. The newspaper said the reforms were discussed at a seminar in Indore attended by indirect tax professionals.
Among the most significant proposals is a plan to make refunds on input services under the inverted duty structure available from November 1, while refunds linked to input tax credit on capital goods would begin from April 1, 2027, according to the Free Press Journal. The report said senior GST adviser Sunil P. Jain told the seminar that the broader package was aimed at reducing friction for businesses, especially by simplifying compliance and limiting room for subjective decisions by tax officers. Livemint has also reported that the Council’s reform push is intended to ease blocked working capital, broaden the effective use of input tax credit and make the system less burdensome without changing tax rates.
The proposals would also tighten the rules around notices and penalties. Jain said the Council has discussed setting a minimum threshold of Rs 10,000 before a notice can be issued, removing minimum penalties in non-fraud cases and capping penalties at 5% where taxpayers pay the demand in full within the prescribed time, according to the Free Press Journal. The report added that the Council has considered lifting the prosecution threshold from Rs 1 crore to Rs 5 crore and revisiting arrest provisions.
There are also proposed changes to transport checks and blocking of input tax credit. The newspaper said the plan would restrict inspection and detention powers during movement of goods so that checks are carried out only on specific information and with approval from a designated senior officer. It also said taxpayers should be given a hearing before ITC is blocked under Rule 86A. For smaller businesses, the proposals include waiving late fees for eligible firms with turnover of up to Rs 5 crore in the previous financial year when GSTR-3B is filed by month-end, although interest would still apply. An optional scheme for quarterly tax payments and annual returns is also under discussion for small taxpayers selling only to consumers.
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