The Goods and Services Tax Council is scheduled to hold its 57th meeting in New Delhi on September 12, 2026, with proposals concerning input tax credit, corporate guarantees, employee-related benefits and compliance relief for small businesses expected to figure prominently in the deliberations.
The meeting will be held more than a year after the Council’s previous meeting on September 3, 2025. According to an office memorandum issued by the GST Council Secretariat, the Council will meet from 11 am on September 12, while senior tax officers will hold a preparatory meeting in New Delhi on September 11.
The detailed agenda and venue are to be communicated separately. Consequently, the proposed reforms remain under consideration and should not be treated as final decisions of the Council. The meeting schedule has been confirmed by the Secretariat, while the likely policy matters have been reported by persons familiar with the deliberations.
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Relief for Buyers Facing ITC Denial Due to Supplier Default
One of the most significant proposals relates to the denial or reversal of input tax credit where a supplier collects GST from the buyer but fails to deposit the tax with the government.
Under the existing framework, a genuine buyer may face ITC consequences because of non-compliance by the supplier, even where the buyer has received the goods or services, holds a valid tax invoice and has paid the full consideration, including GST. Businesses have repeatedly argued that a recipient should not be penalised for a supplier’s failure when the underlying transaction is genuine and the buyer has complied with the requirements within its control.
The proposal expected to be considered by the Council seeks to protect such buyers. ITC may be permitted where the recipient can demonstrate that the entire invoice value, including the GST component, was paid to the supplier through banking channels or other prescribed payment instruments.
If approved, the measure could provide substantial relief in disputes involving supplier defaults. It may also reduce the working-capital burden created when businesses are required to reverse credit and pursue recovery from non-compliant suppliers.
The precise safeguards, documentary requirements and eligibility conditions will, however, depend on the final recommendation of the Council and the amendments or notifications subsequently issued by the government.
ITC on Employee Vehicles and Insurance May Be Examined
The Council may also consider relaxing restrictions on ITC relating to certain employee-focused business expenses.
Among the issues likely to be examined is the availability of credit on vehicles purchased in a company’s name and provided for employees’ use. Existing restrictions on motor-vehicle credit have generated disputes over whether particular vehicles are used for legitimate business requirements or amount to blocked personal-consumption expenditure.
Another proposal concerns ITC on group health and life insurance policies purchased by employers for their employees. Businesses have maintained that such insurance is increasingly an integral part of employee compensation, welfare and retention policies and should therefore be recognised as a legitimate business expense for credit purposes.
Any relaxation would be significant for companies with large workforces. The scope of the relief may nevertheless depend on factors such as whether the benefit is mandated by law, incorporated into employment contracts or provided under an organisation-wide human-resources policy.
Corporate Guarantee Taxation Under Review
The GST treatment of corporate guarantees provided between related companies is another area expected to receive attention.
Corporate groups have sought greater certainty over the valuation and taxation of guarantees issued by a parent company or another group entity to secure loans and credit facilities. Questions relating to the value of the service, the applicable tax and the treatment of guarantees provided without a separately charged consideration have led to disputes and differing interpretations.
Businesses are seeking a simpler and more predictable mechanism that reflects the commercial nature of intra-group financing arrangements while avoiding disproportionate tax and compliance consequences.
The Council may examine whether the existing valuation framework requires modification or clarification. A uniform approach could help reduce disputes over guarantees and bring consistency to assessments across jurisdictions.
Compliance Relief for Small Businesses Operating Across States
Another possible subject of discussion is a simplified registration mechanism for small businesses carrying on activities in more than one state.
At present, businesses operating across state boundaries generally face separate registration and compliance responsibilities in each relevant state or Union Territory. This can require multiple returns, reconciliations and jurisdiction-specific interactions, adding considerably to the administrative burden of smaller enterprises.
The proposal is expected to explore whether a more streamlined arrangement can be introduced for eligible small businesses with multi-state operations. The exact form of the proposed facility, including eligibility limits and the manner in which tax revenue would be allocated among states, is yet to be officially disclosed.
A simplified framework could help small enterprises expand beyond their home states without immediately assuming the compliance infrastructure normally maintained by larger organisations.
Refunds and Accumulated ITC Also in Focus
Businesses are also seeking action on delayed refunds, accumulated and unutilised ITC, and other credit-related restrictions that affect working capital.
Exporters and businesses operating under an inverted duty structure frequently accumulate credit that cannot be fully utilised against their output tax liability. Delays or limitations in obtaining refunds can lock up substantial funds and increase financing costs.
Industry representatives expect the Council’s ease-of-doing-business review to address procedural difficulties in refund claims and identify ways to release legitimate credit more efficiently.
Industry Seeks Relief From Legacy GST Disputes
Corporates have also called for a mechanism to regularise legacy tax positions, particularly in sectors such as online gaming where significant disputes arose over the interpretation of the law and the applicable valuation methodology.
Manoj Mishra, Partner and Tax Controversy Management Leader at Grant Thornton Bharat, said the meeting offered an opportunity to restore momentum to the GST reform programme and provide certainty on issues that businesses have faced for an extended period.
According to Mishra, the focus should move beyond isolated amendments towards improving the overall quality, predictability and ease of compliance of the GST framework. He also highlighted the need to address genuine hardship arising from supplier defaults and reduce ambiguities that generate avoidable litigation and compliance expenditure.
Meeting Follows GST 2.0 Rate Overhaul
The upcoming meeting follows the major rate-rationalisation exercise approved at the 56th GST Council meeting in September 2025.
Under the GST 2.0 framework, the earlier multi-rate structure was substantially consolidated around the principal rates of 5% and 18%. A special rate of 40% was introduced for specified luxury and sin goods, while several products previously falling within the 12% and 28% categories were moved to revised rates. The restructured rates largely came into effect from September 22, 2025.
With rate rationalisation already undertaken, expectations from the 57th meeting are centred on the operational quality of GST—particularly credit protection, refunds, valuation clarity and a reduction in compliance-related disputes.
Any proposal approved by the Council will ordinarily require implementation through legislative amendments, rules, notifications or circulars. Businesses will therefore have to await the Council’s formal recommendations and the corresponding government measures before acting on the anticipated reliefs.
