GST Council Approves Procedural Reforms to Reduce Compliance and Litigation

The GST Council has approved a series of procedural reforms aimed at streamlining indirect tax administration, focusing on liquidity, compliance, and legal risk mitigation. Key measures include the automation of refund processes, the expansion of input tax credit eligibility, and the reduction of administrative timelines for refund claims. These changes are designed to alleviate working capital constraints and lower operational costs for businesses.

To address concerns regarding regulatory overreach, the Council has recommended raising the prosecution threshold from ₹1 crore to ₹5 crore and narrowing the scope of arrest powers under the Central Goods and Services Tax Act. While these adjustments reduce the risk of criminal proceedings for minor infractions, civil recovery and penalty mechanisms remain in effect. The reforms also introduce a minimum threshold of ₹10,000 for show-cause notices to minimize low-value litigation.

For the e-commerce sector, the Council has proposed simplified registration processes for small suppliers operating across state lines. Furthermore, the introduction of faceless administration and centralized compliance windows, scheduled for 2027-28, aims to standardize tax enforcement. Despite these improvements, structural differences between state and central tax administration may continue to present challenges to achieving a fully unified national tax regime.