57th GST Council Proposes New Mechanism to Align Liability and ITC in GST Returns from April 2027

The 57th Meeting of the GST Council was held on October 08, 2026, in New Delhi, under the chairpersonship of the Union Finance & Corporate Affairs Minister, Smt. Nirmala Sitharaman. At the meeting, the GST Council made recommendations relating to process reforms, primarily covering registration, returns, refunds and adjudication; clarifications regarding the applicability of GST on supplies of certain goods and services; and other measures for trade facilitation and streamlining GST compliances.

Alternate mechanism for making amendment of liabilities and input tax credit in returns to minimize mismatches and reduction of notices/intimations on account thereof: The GST Council recommended inter-alia the following measures to streamline return filing process, so as to minimize mismatches in liability and input tax credit (ITC) in returns:

• Enhancements in FORM GSTR-1/1A/IFF to enable better reconciliation of the details furnished in these forms with the details reported in the return in FORM GSTR-3B.
• Insertion of a rule 86D in the CGST Rules, 2017, to provide for a facility namely, “Electronic Statement of tax paid on Reverse charge basis and input tax credit claimed” on the portal, to facilitate the taxpayers in correct reporting of tax liability and ITC on supplies liable to RCM in returns.
• Insertion of sub-rule (1A) in rule 61 of the CGST Rules, 2017 to provide a mechanism of correct reporting and correction/rectification of liability in the return, so that liability in the return in FORM GSTR-3B aligns with the details of liability furnished in FORM GSTR-1/1A/IFF.
• Amendment in FORM GST DRC-03, to declare the details of the underlying invoice for which payment has been made.
• Insertion of sub-rule (6A) in the rule 60 of the CGST Rules, 2017, in respect of the facility namely, Invoice Management System (IMS), to allow a recipient to accept, reject or keep pending a document pertaining to inward supply received on the portal, for the purpose of generation of statement of ITC in FORM GSTR-2B, subject to certain conditions, including the period for which a credit note can be kept pending on IMS.
• Insertion of rule 86C in the CGST Rules, 2017 to provide for a facility namely, “Electronic Credit Reversal and Reclaim Statement” on the portal, to facilitate the taxpayers in correct reporting of ITC reversed and reclaimed in FORM GSTR-3B.
• Insertion of sub-rule (1B) in the rule 61 of the CGST Rules, 2017, to provide a mechanism of correct reporting and correction/rectification of ITC in the return, so that ITC availed in the return in FORM GSTR-3B aligns with the details of ITC made available in FORM GSTR-2B.
• Issuance of a circular to clarify the manner of furnishing correct and proper information of ITC and reversal thereof in return in FORM GSTR-3B, in the context of IMS, Electronic Credit Reversal and Reclaim Statement and Electronic Statement of tax paid on Reverse charge basis and input tax credit.

The Council recommended that the provisions regarding alternate mechanism for amendment of liability and ITC in the GST return, may be brought into force from the return of April, 2027. These measures will considerably reduce mismatches in liability and ITC in returns, thus not only reducing demand notices and system generated intimations on account of such mismatches, but also improving the integrity of ITC across the supply chain, thereby facilitating taxpayers.

Further, the Council recommended placing the proposed revised mechanism in the public domain for a time-bound consultation. Union Finance Minister was authorized to approve requisite changes/modifications, as may be necessary, based on feedback received from the stakeholders.

The Press Release can be accessed at:  https://www.pib.gov.in/PressReleaseDetail.aspx?PRID=2320934&reg=48&lang=1