1

Arrest

Section 69 omitted: no arrest power under GST

2

Prosecution

Monetary threshold raised from ₹1 crore to ₹5 crore; offences in section 132 narrowed

3

General penalty

Section 125 maximum cut from ₹25,000 to ₹10,000

4

Show cause notices

No SCN if tax involved is below ₹10,000; pending notices/appeals below ₹10,000 to be treated the same way

5

Penalty on adjudication

5% penalty in non-fraud cases if tax + interest paid within 30 days (s.73) / 60 days (s.74A) of order; ₹10,000 minimum penalty removed

6

Appeals

Pre-deposit for penalty-only orders capped at ₹40 crore (₹20 cr CGST + ₹20 cr SGST)

7

Blocked ITC (s.17(5))

Outdoor catering, health and life insurance, telecom towers, pipelines outside factory, free samples, expired goods written off — restriction removed

8

Refund of ITC

Input services (IDS) from 1 Nov 2026; capital goods (zero-rated and IDS) over 60 months from 1 Apr 2027

9

Refund processing

Cash-ledger refund fully automated; acknowledgement in 10 days (was 15); 90% provisional refund auto-sanctioned

10

Export of services

Supplies to own foreign branches/offices can qualify as exports; s.13(3)(a) IGST omitted

11

Registration

Auto-acceptance of amendments (except PPoB); auto-cancellation; ECO warehouse can be PPoB for small sellers

12

Returns

Statutory ledgers for RCM and ITC reversal/reclaim; GSTR-3B correction mechanism from April 2027 return

13

E-way bill

Interception only on intelligence with JC authorisation; no interception in transit States; no confiscation of goods in transit

14

Rule 86A

Taxpayer can object and get personal hearing before credit blocking decision

15

Late fee

Waived for turnover up to ₹5 crore if return filed by the end of the month in which it was due

16

Small B2C business

In-principle optional Annual Return Quarterly Payment (ARQP) scheme for turnover up to ₹5 crore

17

E-invoicing

Extended to RCM inward supplies from unregistered persons and import of services (turnover ₹5 crore+)

18

Rates

Clarifications on sublimation paper, toys, bio-stimulants, isabgol, scrap under RCM; 5% option for EV passenger transport; several exemptions

New registration (non-rule 14A cases)

Rule 14A auto-registration only where ITC passed on is up to ₹2.5 lakh/month. Other applications go to officers; document requirements unclear, leading to frequent REG-03 queries and rejections

Comprehensive circular + FAQs on documents; drop boxes in REG-01 for prescribed documents; user-friendly portal with drop-downs and tool-tips

Fewer queries and rejections; uniform practice across States

Amendment of registration (rule 19)

Non-core fields auto-approved; core fields (name, PPoB, additional places, partners/directors) need officer approval

All fields auto-accepted except PPoB; for rule 14A registrants, even PPoB auto-accepted

Near real-time updates without officer interface

Cancellation on application (REG-16)

Officer verifies and passes order; often delayed or queried

Phase 1: auto-acceptance once returns filed and dues paid, where ITC passed on never exceeded ₹2.5 lakh/month, or GSTR-10 filed in time. Phase 2: all applications auto-accepted; GSTR-10 details furnished in REG-16 itself

Clean, quick exit for closed businesses

Suo-motu cancellation (rules 21, 21A, 22, 23)

Wide officer grounds; suspension and cancellation by officer; revocation by application

Some rule 21 grounds omitted; new rule 23A — system-based cancellation and revocation for non-filing of returns or non-furnishing of bank details, revoked automatically on compliance

Transparency; less discretion; automatic restoration

Small sellers on e-commerce platforms

Supplier needs a physical place of business in each State to register there; inter-State ECO sales by unregistered small suppliers not permitted

New rule 14B: declare the ECO’s warehouse in that State as PPoB; auto-registration where ITC passed on is up to ₹2.5 lakh/month (excluding stock transfers between distinct persons)

Small sellers can sell pan-India without setting up offices

GSTR-1 vs GSTR-3B liability

Mismatch triggers DRC-01B intimation (rule 88C); correction only through later returns or DRC-03

GSTR-1/1A/IFF enhanced for reconciliation; new rule 61(1A) for correcting liability so GSTR-3B aligns with GSTR-1

Fewer DRC-01B intimations and demand notices

GSTR-2B vs GSTR-3B ITC

Excess ITC triggers DRC-01C (rule 88D)

New rule 61(1B) for correcting ITC so GSTR-3B aligns with GSTR-2B

Fewer ITC mismatch notices

RCM reporting

Portal statement for RCM liability/ITC exists as a facility, without statutory backing

New rule 86D: “Electronic Statement of tax paid on RCM basis and ITC claimed”

Reliable RCM tracking; prevents ITC claimed without RCM payment

ITC reversal and reclaim

Electronic Credit Reversal and Reclaim Statement exists on portal as a facility

New rule 86C gives it statutory form

Clean audit trail of reversals and reclaims

Invoice Management System (IMS)

Accept/reject/pending available; rules on credit notes kept pending unclear

New rule 60(6A): IMS actions formally drive GSTR-2B, with a time limit for keeping credit notes pending

Legal certainty for IMS-based ITC

DRC-03 voluntary payment

No invoice-level detail captured

DRC-03 to capture the underlying invoice

Payments link to specific invoices; fewer duplicate demands

Guidance

Scattered advisories

Circular on reporting ITC and reversals in GSTR-3B using IMS, ECRRS and RCM statement

Uniform reporting

Excess cash-ledger balance

Officer processes the RFD-01 application

Phase 1: full refund sanctioned automatically by the system

Near-immediate release of idle cash

Acknowledgement / deficiency memo (rule 90)

Within 15 days

Within 10 days; deemed acknowledgement if officer does not act in 10 days

Removes delays at the threshold stage

Provisional refund — zero-rated and IDS

90% provisional refund sanctioned by the officer

Phase 1: 90% sanctioned automatically on system risk evaluation

Faster working capital

Final refund — zero-rated

Officer-sanctioned final order

Phase 2: system acknowledgement and full automated sanction after adjusting dues, for low-risk claims

Faceless, quicker refunds for exporters

Documents (RFD-01)

Scanned statements and invoices uploaded

System-readable data; scanned documents dispensed with for zero-rated and IDS

Lower compliance cost

Rule 89(4)(C) cap

Zero-rated turnover of goods capped at 1.5 times value of like goods supplied domestically

Cap removed

Exporters with higher export prices get full refund

Minimum refund (s.54(14))

No refund below ₹1,000; unclear whether per tax head

₹1,000 applies to total of CGST + SGST/UTGST + IGST

Small claims not lost on head-wise splitting

Interest on refund of pre-deposit (s.115)

Interest at rate under s.56; disputes on rate and period

s.115 made standalone for the rate; circular to clarify

Certainty on interest after winning appeals

ITC on input services — IDS refund (s.54(3)(ii))

Excluded: only inputs count in Net ITC (upheld by the Supreme Court in VKC Footsteps)

Included for ITC availed on or after 1 Nov 2026

Larger IDS refunds for service-heavy manufacturers

ITC on capital goods — zero-rated and IDS refunds

Excluded from refund

Included for ITC availed on or after 1 Apr 2027, refund spread over 60 months

Relief for capital-intensive exporters and IDS sectors

Quality of notices and orders

No uniform standard; fraud/suppression often invoked mechanically; personal hearings uneven

Circular with guidelines on quality and timeliness of SCNs, orders and appeal orders; fraud or suppression invoked only on merits; natural justice and personal hearing

Better-reasoned orders; fewer remands

Minimum amount for SCN (ss.73, 74, 74A)

No threshold; notices issued for any amount

No SCN if tax (CGST + SGST + IGST + Cess) is below ₹10,000; pending notices and appeals below ₹10,000 decided as if the threshold always applied

Large number of petty notices and appeals closed

Voluntary payment with penalty

Paid amounts treated as tax, interest and penalty

Penalty deemed a “charge” where full tax, interest and penalty paid voluntarily within time

Reduced stigma of “penalty”; cleaner closure

Penalty after adjudication — non-fraud

10% of tax or ₹10,000, whichever higher

Reduced to 5% if tax and interest paid within 30 days (s.73) or 60 days (s.74A) of order

Incentive to settle instead of appealing

Minimum penalty ₹10,000 — non-fraud

Applies

Removed

Small cases get proportionate penalty

General penalty (s.125)

Up to ₹25,000

Up to ₹10,000

Relief for technical and procedural lapses

Pre-deposit — penalty-only orders (ss.107(6), 112(8))

10% of penalty without a specific upper limit

Capped at ₹40 crore (₹20 cr CGST + ₹20 cr SGST/UTGST)

Access to appellate remedy in large penalty cases

Outdoor catering

Blocked, except same line of business or statutory obligation

Restriction removed

All employers, event businesses

Health insurance and life insurance

Blocked, except where obligatory under law or same line

Restriction removed

Every business providing employee insurance, including CA firms

Telecommunication towers

Blocked as immovable property (Explanation to s.17)

Restriction removed

Telecom and infrastructure sector

Pipelines laid outside factory premises

Blocked as immovable property

Restriction removed

Oil, gas, chemical and water companies

Free samples

Blocked under s.17(5)(h)

Restriction removed

Pharma, FMCG, marketing-led businesses

Goods destroyed or written off on expiry of shelf life as required by law

Blocked

Restriction removed

Pharma, food, FMCG

Services to own foreign branch (s.2(6)(v) IGST, Explanation 1 to s.8)

Not an export: supplier and recipient are establishments of a distinct person

Condition omitted

Export status and refund for services to foreign offices/branches — IT, GCC, consulting, CA networks

Services on goods made physically available (s.13(3)(a) IGST)

Place of supply = place of performance (India), so not an export

Clause omitted; place of supply = location of recipient (s.13(2))

Repair, testing, processing services for foreign clients become exports

Payment in INR / foreign exchange

Ambiguity on permissible modes (e.g., Vostro/INR receipts)

Circular to clarify

Fewer refund rejections on payment grounds

Goods to overseas buyer delivered in SEZ/FTWZ (s.16(1) IGST)

Zero-rating status unclear

Explanation: deemed supply to SEZ/FTWZ where payment is in convertible foreign exchange or INR as permitted by RBI

Certainty of zero-rating for such supplies

Arrest (s.69)

Commissioner may authorise arrest for specified offences above monetary limits

Section 69 omitted entirely

No arrest under GST; ends coercive pressure during investigations

Prosecution threshold (s.132)

Prosecution from ₹1 crore (fake invoice cases); ₹2 crore for other offences

Raised to ₹5 crore

Only large-scale evasion faces prosecution

Scope of offences (s.132(1))

Wide: includes clause (i), “evades tax” in (e), “in any other manner deals with” in (h); (c) covers ITC on fake invoices broadly

Clause (i) omitted; “evades tax” deleted from (e); “in any other manner deals with” deleted from (h); (c) limited to fraudulent ITC without receipt of goods/services or without invoice

Criminal law focused on genuine fraud

Punishment

Graded terms by amount

Rationalised

Proportionate punishment

Interception of conveyance (s.68)

Any proper officer may intercept anywhere, including transit States

Only on specific intelligence, with authorisation of officer not below Joint Commissioner; only in State where supplier or recipient is located/registered

End of random roadside checks and transit-State harassment

Detention without documents

Allowed

Still allowed in any jurisdiction where no e-way bill or origin/destination document

Anti-evasion safeguard retained

Confiscation (s.130)

Can apply to goods and conveyances in transit

Not applicable to goods/conveyances in transit

Transporters protected from confiscation of vehicles

Transfer of title in IPR (Schedule II)

Temporary transfer = service; permanent transfer treated as goods or services inconsistently

All transfers (temporary or permanent) = supply of services

Single rate and place-of-supply rule; easier cross-border IPR deals

Blocking of ITC (rule 86A)

Blocked without prior hearing

Taxpayer may file objection and get personal hearing before decision

Natural justice in credit blocking

Late fee on returns (s.39(1))

Late fee from day one after due date

Waived for turnover up to ₹5 crore if filed by end of the month in which due

Relief to MSMEs for short delays

Rule 96(10)

Struck down by High Court; position on retrospective effect contested

Omission effective from 23.10.2017, per Supreme Court decision

Exporters’ past IGST refunds protected

ARQP scheme

QRMP and composition only

In-principle: optional Annual Return, Quarterly Payment scheme for turnover up to ₹5 crore with only B2C supplies

One return a year for small retailers

Time limits (ss.16, 37, 39)

GSTR-1/3B filing window and s.16(4) ITC time limit not aligned

Aligned

ITC not lost because of mismatched deadlines

ECO liability (s.9(5))

Disputes on business models

ECO liable for notified services whatever the business model

Certainty for aggregators

Notices for multiple years

Some courts held consolidated notices invalid

Validation clause to validate such notices

Note: limits the defence available in such cases

E-invoicing

B2B outward supplies and exports

Extended to RCM inward supplies from unregistered persons and import of services, for turnover ₹5 crore+

Additional compliance for larger taxpayers

GSTAT

GSTAT rules of 2023

Aligned with Tribunals Reforms Act, 2026 and 2026 Rules

Stable tribunal structure

Sublimation paper

Classification disputed

Heading 4809; past cases regularised

Toys (heading 9503)

Rate entry read as limited to tricycles, scooters, pedal cars

Covers all toys — dolls, puzzles etc.

Seaweed-extract bio-stimulants

Classification disputed

Heading 3101 as fertilisers if registered under FCO Schedule VI; past regularised

Second-hand vehicles (margin scheme)

ITC restriction read broadly

ITC allowed on all inputs/services except the vehicles bought

Plastic waste, e-waste, tyre scrap, used cooking oil

Forward charge

RCM when supplied by unregistered to registered person; 2% TDS on B2B supplies

Psyllium (isabgol) seeds

Rate unclear by form

NIL, whether fresh, chilled, frozen or dried

Re-treaded tractor tyres

Higher than new tractor tyres

Aligned with new tractor tyres

Compensation Cess — CSD and Unit Run Canteens

Cess not levied in past

Exempted: vehicles 01.07.2017–30.09.2022; aerated drinks 01.07.2017–31.03.2022

Passenger transport / vehicle rental using EVs (charging included)

Option of 5% with restricted ITC

Delivery services through ECO (other than courier/postal)

ECO pays tax under s.9(5) where supplier not liable to register; 5% without ITC

Delivery of goods ordered through ECO

5% without ITC; GTA exemption (Entry 21A) excluded for such goods

Motor vehicle leasing

Clarity on registration charges, road tax, insurance, FASTag recovered from lessee

Restaurant, hotel (up to ₹7,500), gym services

Limited ITC in same line of business

Helicopter seat-sharing — North-East, Sikkim, Bagdogra

Exempt

Storage/warehousing of seeds for sowing

Exempt

Curing of coffee by curers for cultivators

Exempt

Seamen’s Provident Fund Organisation services

Exempt

R&D services (Entry 44A)

Self-certification by head of institution that activity is R&D, not consultancy

Import of services by Indian establishment of foreign shipping line from related person, without consideration

Exempt; past regularised

Upfront/concession amount paid to NHAI under TOT model

Exempt

O&M services under highway TOT model

Special procedure for valuation and time of payment

Fund Transfer Pricing in banks

Notional interest between branches treated as “interest” (exempt)

Small traders and MSMEs

No SCN below ₹10,000; late fee waived for short delays (turnover up to ₹5 crore); lower general penalty (₹10,000); auto-cancellation and revocation; proposed ARQP annual return for B2C businesses

Honest business owners

No arrest; prosecution only above ₹5 crore; narrower criminal offences; hearing before ITC blocking — less fear-based compliance

Exporters

Automated 90% provisional refund; cash-ledger refund without officer; 1.5x cap removed; ITC on capital goods refundable; services to own foreign branches count as export

Manufacturers (inverted duty)

Refund of ITC on input services (from 1 Nov 2026) and capital goods (from 1 Apr 2027) — releases blocked working capital

Employees

Employers can take ITC on health and life insurance and canteen catering, making such benefits cheaper to provide

Transporters and drivers

No random interception; no checks in transit States; no confiscation of vehicles in transit — smoother, faster movement of goods

E-commerce sellers and gig delivery workers

Register in other States using ECO warehouse; clear tax on delivery services through ECOs

Farmers and rural economy

Exemption for seed storage and coffee curing; NIL GST on isabgol seeds; bio-stimulants classified as fertilisers

Consumers

Lower cascading of tax (wider ITC) should reduce costs; option of 5% on EV cabs encourages clean transport

North-East and hill States

Exemption on helicopter seat-sharing services improves connectivity

Environment

Scrap and e-waste chain brought under RCM/TDS; EV transport incentivised

Government and judiciary

Fewer petty notices, appeals and writs; validated notices reduce re-litigation; automation reduces discretion and corruption risk

Litigation

Notices below ₹10,000 drop; pending ones to be closed; penalty 5% if paid within 30/60 days of order

Review client files for sub-₹10,000 notices and appeals; advise on pay-within-window vs appeal

Penalty-only appeals

Pre-deposit capped at ₹40 crore

Re-evaluate appeals not filed for want of pre-deposit (check limitation)

Prosecution and investigation

No arrest; ₹5 crore threshold

Representation in investigations becomes less coercive; focus on merits

Multi-year notices

Validation clause proposed

Do not rely only on the “multiple years in one notice” ground; build defence on merits

Refunds

Automation, deemed acknowledgement, new ITC heads

New engagements: IDS refunds on input services (ITC from 1 Nov 2026); capital goods refunds (from 1 Apr 2027) — set up 60-month tracking

Exports

s.2(6)(v) and s.13(3)(a) relief

Re-examine IT/GCC/consulting clients billing foreign group entities; LUT and refund planning

Returns (April 2027)

Rules 61(1A), 61(1B), 86C, 86D; IMS credit-note time limit

Build monthly GSTR-1/2B/3B reconciliation and RCM/ECRRS ledgers; respond in public consultation

E-invoicing

RCM from unregistered persons and import of services (₹5 crore+)

Update client ERP and SOPs

Registration

Clear document list; auto-amendments; auto-cancellation

Faster onboarding; rule 14B registrations for e-commerce clients

Rule 86A

Objection and personal hearing

New representation work for clients with blocked credit

1 Nov 2026

ITC on input services availed on or after this date eligible for IDS refund

1 Apr 2027

ITC on capital goods availed on or after this date eligible for zero-rated and IDS refund (over 60 months)

Return for April 2027

Alternate mechanism for amending liability and ITC (rules 61(1A), 61(1B), 86C, 86D, 60(6A))

23 Oct 2017 (retrospective)

Omission of rule 96(10)

On amendment

All Act-level changes (ss.17(5), 54, 69, 73/74/74A, 107, 112, 125, 129, 130, 132; IGST ss.2(6), 13, 16)