The 57th GST Council meeting scheduled for September 12, 2026, will likely consider resolving some key bottlenecks straining the GST framework. Among the proposals under consideration are blocked input tax credit cases and a faster registration process.
After a major rate rationalisation exercise in its 56th meeting last year, the council is likely to focus on simplifying GST compliance. On the council’s agenda will be areas like refunds, registration and returns, where committees were set up this year to examine various issues.
“At least four or five GST law committees have been dedicated to these changes, and all of those recommendations are likely to find their way into the agenda of the GST Council meeting. So, a big chunk of the changes this time would revolve around simplifying processes and facilitating businesses,” an tax expert said.
A key issue being considered is blocked input tax credit on certain business expenditures. Employee-related expenses, such as rent-a-cab, cafeteria and canteen services, currently do not qualify for input tax credit. Tax pundits say that the government has taken a lot of inputs from industry bodies on this, and there could potentially be some relaxation for taking input tax credit on certain employee-related expenses.
“The rationale for allowing credit on these expenses is that, under income tax, to some extent these expenses are allowed as a deduction. So when income tax considers them as a business expenditure, but GST says they are for employee consumption and therefore blocks the credit, there is a contradiction between the two tax regimes,” another tax expert said.
Another issue under consideration is related to faster GST registration. While the law requires the registration to be completed within three to seven working days, it’s hardly the case in reality, said experts.
“There are registration requirements which are likely to get streamlined. There were issues, for instance, in the case of registration of e-commerce operators and the places where they operate. Businesses had to take additional places of business, and a lot of those requirements are now being looked at for simplification,” he said.
Discussions are also expected on faceless, risk-based GST assessments and audits, greater use of technology and standardisation of audit procedures, another tax expert said.
“Clarity is also needed on GST under reverse charge mechanism (RCM) on various payments made to local authorities, which have remained contentious,” he said.
Under RCM, businesses have to pay the tax first in cash and then take the credit, particularly in the case of imported services, Sapra said, adding that they cannot utilise their existing accumulated credits to discharge that liability.
“This is creating further accumulation because payments such as royalties and other imported services typically attract 18% GST, and when you already have an inverted duty structure, the problem gets compounded. A solution would be to allow businesses to pay this tax using available credits rather than requiring them to first pay it in cash,” he said.
Multiple audits across States strain GST system
One of the main challenges that big businesses face in the GST system is audits and assessments, as every state authority tends to have a different view on the same transaction. A company that has numerous GST registrations across different states has to deal with multiple officers and assessment authorities. This at times leads different State authorities to take different positions on the same transaction.
“For assessments, there should be a single authority, whether it is the Central GST or the State GST authority. The mechanism will have to be decided, but the idea should be to ensure that businesses are not facing multiple officers during audits and assessments,” he said.
He further said that even after nine years of GST, interpretational uncertainty and litigation remain the biggest challenges, particularly around classification, place of supply for export transactions, valuation, exemptions and ITC.
Tax experts contended that the next phase of GST reforms should therefore focus on seamless ITC, faster refunds and risk-based administration, rather than adding further layers of compliance.
Source from: https://cfo.economictimes.indiatimes.com/news/tax-legal-accounting/57th-gst-council-meet-faster-registration-easier-itc-and-simpler-compliance-on-agenda/133719913
