GST Council proposes registration and refund reforms

The 57th GST Council has proposed several reforms aimed at simplifying tax processes and improving liquidity for specific sectors. One major recommendation involves transitioning to a system-driven approach for GST registration cancellations and revocations. This phased implementation would allow for automatic acceptance of cancellation applications once pending returns are filed and outstanding dues are paid, reducing the current reliance on manual officer approvals.

Additionally, the Council has proposed significant changes to the refund framework to support the gems and jewellery industry. To address the accumulation of unutilised input tax credit (ITC), the reforms suggest extending refund eligibility under the inverted duty structure to include ITC on input services and capital goods. Proposed timelines for these changes include input services from November 1, 2026, and capital goods from April 1, 2027. The Council also recommended moving toward automated provisional sanctioning of up to 90% of eligible refund claims to improve working capital availability.