The Goods and Services Tax (GST) Council, chaired by Union Finance Minister Nirmala Sitharaman, has unveiled a comprehensive package of major procedural reforms aimed at transforming the indirect tax system into a more taxpayer-friendly, trust-based, and system-driven regime by easing penalties, prosecution provisions, registration cancellations, and day-to-day compliance burdens for businesses. These progressive changes complement the sweeping tax rate and slab rationalization implemented a year ago, a strategy that has successfully expanded the tax base, as evidenced by taxable supply growing by over 25 per cent in FY26 compared to 13 per cent in the previous fiscal year, and overall GST revenues maintaining an 11 per cent growth rate this fiscal alongside a drop in the effective domestic tax rate to 13.13 per cent. Recognizing that businesses interact far more frequently with procedural requirements than rate adjustments, the Council approved far-reaching rule modifications across registration, tax returns, refunds, dispute resolution, enforcement, and interstate goods movement, leveraging advanced network analysis and invoice matching to make tax administration less dependent on direct officer interaction. Among the most significant structural overhauls is the landmark reform concerning tax refunds, which will now permit the refund of accumulated input tax credit (ITC) on input services under the inverted duty structure starting November 1, 2026, followed by refunds of ITC on plant and machinery for both exporters and general businesses beginning April 1, 2027, spread systematically over 60 months. Furthermore, the refund mechanism is becoming largely automated and accelerated, reducing acknowledgment timelines from 15 days to 10 days—with unacknowledged claims automatically deemed accepted—while systems will independently sanction 90 per cent of eligible claims via risk assessment and issue refund orders within just three working days, alongside automated refunds for excess electronic cash ledger balances. Officials highlighted that these reforms allow enforcement agencies to shift from deterrence-based policing to sophisticated digital detection, ensuring businesses experience faster liquidity realizations, reduced compliance friction, and greater operational certainty as the country’s tax architecture continues to evolve toward maximum efficiency.
