Executive Summary of Key GST Changes (Effective Nov 2026 onwards)

Area	Key Change	Effective Date / Impact
GST Rates - Goods	Plastic scrap, e-waste, tyre scrap and used cooking oil procured from unregistered suppliers taxable under RCM; 2% TDS on B2B supplies. GST on re-treaded tractor tyres reduced to 5%.	Oct 2026
GST Rates - Services	EV passenger transport/rental eligible for 5% GST with restricted ITC. Delivery services via ECOs made taxable in hands of ECOs. ITC relaxation for restaurants, catering, hotels and fitness services used in same line of business.	Oct 2026
Credit Notes / Discounts	Post-sale discounts can qualify for GST credit notes even if not pre-agreed or linked to specific invoices.	1 Nov 2026
Exports	Services performed on foreign-owned goods (job work, repair, testing, R&D etc.) proposed to qualify as exports. Services through foreign branches and supplies delivered in SEZ/FTWZ proposed to be zero-rated.	Budget amendment proposed
Export Realisation	Export proceeds received through INR Nostro/SRVA/SNRR accounts or permissible FEMA set-off treated as realization of export proceeds.	Clarification issued
Input Tax Credit (ITC)	Proposed ITC availability on health/life insurance, outdoor catering, free samples, telecom towers, pipelines and statutory destruction of expired goods.	Budget amendment proposed
ISD Mechanism	ISD can distribute both common and exclusive ITC. Multiple ISD registrations allowed. Credit eligibility/reversal responsibility rests with recipient units.	1 Nov 2026
Banks & NBFCs	Clarified methodology for ITC reporting and 50% reversal; past reporting differences not to attract adverse action if ITC correctly availed.	Clarification issued
Inverted Duty Refund	Refund eligibility extended to ITC on input services. Capital goods ITC also eligible for refund (spread over 60 months).	Input services: 1 Nov 2026; Capital goods: 1 Apr 2027
Export Refunds	1.5x cap on export turnover removed for refund calculations.	1 Nov 2026
Refund Automation	Automatic cash ledger refunds, deemed acknowledgements after 10 days, and 90% provisional refund for low-risk cases within 3 working days.	From 1 Nov 2026
Registration	Officers restricted from seeking documents beyond prescribed list. Most registration amendments to be auto-approved.	1 Nov 2026
Cancellation of Registration	Cancellation powers significantly restricted. Automatic suspension/cancellation for return and bank detail defaults proposed.	1 Nov 2026 / 1 Apr 2027
E-Invoicing	Self-invoices for RCM transactions and import of services to require e-invoicing for taxpayers with turnover above ₹5 crore.	1 Jan 2027
Returns	IMS to get statutory backing; alignment proposed between GSTR-1, GSTR-3B and ITC reporting timelines.	Budget amendment proposed
Compliance	DRC-03 voluntary payments to require invoice-level details. ECO liability under Section 9(5) to be clarified.	Budget amendment proposed
Arrest & Prosecution	GST arrest powers proposed to be withdrawn. Prosecution threshold increased from ₹1 crore to ₹5 crore and limited to serious fraud cases.	Budget amendment proposed
Inspections & Detention	Goods interception only on specific intelligence and senior approval. Transit-state detention powers largely restricted.	Instruction issued
Penalties	Relief measures include withdrawal of SCNs below ₹10,000, lower penalties for non-fraud cases and reduced general penalties.	Budget amendment proposed
Adjudication	SCNs must clearly specify evidence, legal provisions and demand calculations. Virtual hearings encouraged and time-bound disposal emphasized.	Clarification issued
Pre-deposit Refunds	Refund of pre-deposits cannot be denied merely because department intends to file appeal unless stay is granted.	Clarification issued
GSTAT Reforms	Alignment of GSTAT provisions with Tribunal Reforms framework proposed.	Budget amendment proposed

Key Takeaways for Businesses

Impact Area	Benefit
ITC	Significant expansion of credit eligibility and ISD flexibility.
Refunds	Faster and more automated refund processing, including IDS refunds.
Exports	Wider export benefits and relief on foreign exchange realization conditions.
Compliance	Simplified registration, amendment and return processes.
Litigation	Reduced penalties, higher prosecution thresholds and withdrawal of arrest powers.
Digitalisation	Greater automation in refunds, registrations, e-invoicing and compliance monitoring.

Overall: The 57th GST Council reforms mark a shift towards a more taxpayer-friendly regime, focusing on wider ITC availability, export promotion, faster refunds, compliance automation, and reduced enforcement-related hardships.