The latest Goods and Services Tax Council meeting was not about changing GST rates. Instead, it focused on something potentially more consequential for businesses: changing the way the tax system interacts with taxpayers. Finance Minister Nirmala Sitharaman said “absolutely nothing” was taken up on GST rates at the meeting, with the focus firmly on simplifying processes, reducing manual intervention and making tax administration more predictable.
The proposed changes point towards a GST system that is increasingly system-driven rather than officer-driven, with tighter limits on physical enforcement, easier compliance and a move towards faceless assessments.
No Random Stopping Of Goods
One of the most significant recommendations concerns the interception of goods in transit. The Council has recommended that goods can be intercepted only when there is specific intelligence. Random GST officers would not be allowed to stop goods and demand documents without a specific basis.
It has also recommended that goods can be seized only by officers of the destination state or the supplier state.
For businesses moving goods across states, the change could reduce uncertainty and the scope for repeated physical intervention during transportation.
The Council has also recommended removing arrest powers under GST, while raising the prosecution threshold substantially. The threshold for prosecution is proposed to increase from Rs 1 crore to Rs 5 crore.
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The combination of a higher prosecution threshold and removal of arrest powers would represent a significant shift in the enforcement framework, particularly for businesses facing tax disputes or compliance proceedings.
The Council has also recommended that notices should not be issued for monetary amounts below Rs 10,000. Common standards for notices and proceedings are also being proposed, which could bring greater consistency to how GST cases are handled across jurisdictions.
Faceless GST Assessment On The Way
Sitharaman said the government is bringing in faceless assessment for CGST taxpayers. She further added that the council will be coming up with framework for public consultation by end of year and the implementation will happen after the framework is set.
There are around 69.5 lakh taxpayers exclusively under CGST jurisdiction, while around 2 lakh taxpayers fall under multiple CGST jurisdictions. A centralised tax administration mechanism will also be introduced for taxpayers operating across multiple CGST jurisdictions.
Registration and refunds are already increasingly system-driven, and the government now intends to extend this approach to tax administration and assessment.
The Council has also recommended automatic acceptance of routine changes, alongside a simplified online GST registration mechanism for small businesses. Cancellation of GST registration is also set to become easier.
These changes may appear administrative, but they can have a direct impact on the cost and time businesses spend complying with GST. The broader direction is clear: routine matters should increasingly be processed automatically, while officers focus on cases that actually require scrutiny.
The push for automation extends to refunds as well. The acknowledgement period for refund applications is being reduced from 15 days to 10 days. Sitharaman said 90% of all refund claims will be sanctioned within three working days of acknowledgement.
The Council has also recommended allowing input services to be included in refunds under the inverted duty structure for credit availed from November 1.
The government is targeting April 1, 2027 for implementation of the recommendations.
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