The GST Council met on 8 October 2026 for its 57th meeting. GST rates stayed the same this time. Instead, the Council recommended a long list of changes to refunds, input tax credit, registration and penalties.
Five of them matter most for small and mid-size business owners. The third one could save e-commerce sellers a full year’s rent in another state.
One thing up front: these are recommendations. They apply only after the law is amended and the government issues notifications. So read this as what is coming, not what is already in force.
1. Refunds will come faster
Today, after you file a refund claim, the officer has 15 days to acknowledge it or flag what is missing. The Council wants to cut that to 10 days. If the officer does neither within 10 days, the system will treat your claim as acknowledged.
Two more changes speed up the money itself:
90% provisional refund, automatically. For refunds on exports and other zero-rated supplies, and on inverted duty claims, the system will sanction 90% of the amount on its own. It decides based on a risk check, with no officer involved.
Excess cash ledger balance refunded in full. If you have extra money sitting in your electronic cash ledger, the system will refund it automatically.
Who gains: exporters and manufacturers whose cash is stuck in refunds. Faster refunds mean less borrowing for working capital.
2. GST credit on health and life insurance
Right now, section 17(5) of the CGST Act blocks input tax credit on health and life insurance in most cases. The Council has recommended removing that block.
This matters most for group policies you buy for your employees. Individual health and life policies have been GST-free since 22 September 2025, but group policies still carry 18% GST. Until now, that 18% was simply a cost to the business.
A quick example. Say your company pays a premium of ₹5 lakh a year for a group health policy. The 18% GST on top is ₹90,000. Once this change is in force, that ₹90,000 can count as input tax credit, instead of going to waste.
Who gains: any business that offers group health or life cover to its team.
3. E-commerce sellers can skip renting space in other states
This is the one that can save you a year’s rent.
Today, if you sell on an e-commerce platform and want to stock goods in another state’s warehouse, you need a GST registration in that state. And for that, you need a principal place of business there. In practice, that usually means renting a small office or shop just to show an address.
The Council has recommended a new rule 14B. Under it, you could declare the e-commerce platform’s warehouse in that state as your principal place of business. Registration would be granted automatically by the system, subject to conditions.
To qualify, you need to meet these conditions:
You supply goods through an e-commerce platform.
You have no physical presence in that state.
The GST credit you pass on to buyers stays within ₹2.5 lakh a month, not counting stock transfers between your own registrations.
That last point is often misread. It is not about the credit you claim. It is about the GST on your invoices to GST-registered business buyers, which they then claim as credit. At 18% GST, ₹2.5 lakh works out to roughly ₹13.9 lakh of B2B sales a month in that state. Sales to regular consumers pass on no credit at all.
The saving is easy to picture. If a small space in another state costs you ₹15,000 a month, that is ₹1.8 lakh a year, per state, that you would no longer need to spend.
Who gains: small sellers on marketplaces who want to expand to new states without setting up an office in each one.
4. Smaller penalties, fewer notices
The general penalty under section 125 is the catch-all for breaking a GST rule that has no specific penalty of its own. Its maximum is ₹25,000 today. The Council wants to cut it to ₹10,000. This limit applies under each law, CGST and SGST, so the combined maximum falls from ₹50,000 to ₹20,000.
The bigger relief is a new floor for notices. If the total tax involved is under ₹10,000, counting CGST, SGST, IGST and cess together, no show-cause notice will be issued. Notices and appeals already pending below ₹10,000 would also be decided as if this rule had always applied.
A few more changes on the same track:
5% penalty in non-fraud cases, if you pay the tax and interest within 30 days of the order (60 days under section 74A).
No minimum penalty of ₹10,000 in non-fraud cases.
No arrests under GST, and prosecution only above ₹5 crore, up from ₹1 crore.
Who gains: small businesses that get notices for minor mismatches and spend more on fighting them than the tax involved.
5. Stuck credit on rent and transport becomes refundable
Some businesses sell at a low GST rate but buy at a higher one. Say you sell at 5% GST, but pay 18% on raw material, rent and freight. Your credit keeps piling up faster than you can use it. This is called an inverted duty structure.
You can already claim a refund of that piled-up credit, but only the part from goods like raw material. Credit from input services such as rent, transport and professional fees is left out, so it stays stuck in your ledger.
The Council has recommended including input services in this refund. It would apply to service credit you take on or after 1 November 2026. Credit on machinery and other capital goods would follow for credit taken from 1 April 2027, refunded over 60 months.
Who gains: manufacturers whose products carry a lower GST rate than their inputs, common in textiles, footwear and pharma.
Before you act: these are not law yet
The Council’s own press release says these decisions take effect only through circulars, notifications and law amendments. Several need changes to the CGST Act itself, which means Parliament has to pass them first. Dates and conditions can still change along the way.
So don’t claim new credit or cancel a rent agreement yet. Instead, use the waiting time to get ready:
Inverted duty businesses: from 1 November 2026, track credit on rent, freight and other services separately in your books.
Employers: keep the GST invoices for your group health and life policies in one place.
E-commerce sellers: list the states you want to expand to, and check your monthly B2B GST against the ₹2.5 lakh limit.
Anyone with notices: list pending notices and appeals where the tax is under ₹10,000.
And before any decision, confirm it with your CA. This article is general information, not tax advice.
The short version
Refunds: acknowledged in 10 days, not 15, with 90% sanctioned automatically in some cases.
Insurance: GST on group health and life policies becomes claimable credit.
E-commerce: use the platform’s warehouse as your address in another state, if you stay within ₹2.5 lakh of credit passed on a month.
Penalties: general penalty cut to ₹10,000, and no notice under ₹10,000 of tax.
Inverted duty: credit on services like rent and transport becomes refundable, for credit taken from 1 November 2026.
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Sources
Recommendations of the 57th Meeting of the GST Council, PIB / Ministry of Finance, 8 October 2026
Exemption of GST on all Individual Life Insurance and Health Insurance Policies, Department of Financial Services, FAQ