The 57th meeting of the Goods and Services Tax (GST) Council is being held in New Delhi from 11 a.m. The meeting, which was earlier postponed due to the BRICS summit, is being chaired by Union Finance Minister Nirmala Sitharaman. Several issues related to the tax system between the Centre and the states are expected to be discussed, including proposals that could directly affect businesses, exporters and the tax compliance framework.
The meeting is taking place as businesses are seeking further simplification of the GST system. Potential changes concerning input tax credit (ITC), GST refunds and the powers of tax authorities to make arrests are among the key issues under consideration. The implementation of any proposal will become clear only after it is formally finalised.
A key issue related to GST compliance is the power of officials to make arrests. The Council may consider proposals to limit this provision or make the procedure more stringent. According to media reports, the discussion is focused on adding additional safeguards to the arrest process rather than completely removing the arrest provision from the GST law.
Under a potential framework, the arrest of an accused person could be linked to confirmation of the offence and the judicial process. However, the final decision will depend on the GST Council’s recommendation and the subsequent legal process.
Input tax credit, or ITC, is an important component of the GST system for businesses. Under the existing framework, buyers can face difficulties when a supplier has not fulfilled its tax-related obligations. Businesses have argued that where a purchase is valid and payment has been made to the supplier, their ITC should not be withheld solely because of the supplier’s default.
Recent judicial decisions have also intensified the debate over balancing the buyer’s responsibility with a supplier’s default under the tax system. The GST Council may therefore discuss measures to provide greater clarity on ITC rules. The proposed changes could seek to prevent genuine and compliant businesses from facing unnecessary tax disputes.
GST refunds may also be among the key issues at the meeting. Exporters and other eligible businesses have long sought a faster and simpler refund process. According to media reports, the government may prepare a system aimed at providing eligible businesses and exporters with GST refunds within a maximum of 17 days.
The Council may also consider addressing situations in which a buyer’s valid refund is held up because of an error by the supplier. If such a framework is implemented, it could reduce pressure on businesses’ working capital. Faster refunds could also help improve cash flow, particularly for the export sector.
