Overview: The Centre expects a wider GST tax base and better compliance to drive future revenue growth. Following the September 2025 rate rationalisation, taxable supplies increased even as the effective tax rate declined. The GST Council’s October 2026 recommendations focus on registration, returns, refunds and dispute resolution. Businesses should understand these changes, maintain accurate tax records and follow official notifications before adopting any proposed compliance measures.
The next phase of GST reform is expected to rely more on wider tax participation and better reporting than on further rate changes. The aim is to improve revenue collection without adding unnecessary compliance costs for businesses.
The GST Council, At its 57th meeting on 8 October 2026, has recommended several process reforms. These followed a year of growth in reported taxable supplies after the September 2025 rate rationalisation. The figures offer an early indication of how the tax system is responding to lower rates and changing compliance patterns.
GST Revenue Growth After Rate Rationalisation
According to Financial Express, which cited government sources, taxable supplies increased between October 2025 and July 2026, even as the effective tax rate declined.
| Indicator | Reported change |
|---|---|
| Taxable supplies | Increased 25.8% year-on-year |
| Business-to-consumer (B2C) supplies | Increased 26.7% year-on-year |
| Gross tax liability | Increased 13.6% |
| Effective tax rate on domestic taxable supplies | Fell from 14.55% to 13.13% |
The figures suggest that reported taxable activity expanded after the September 2025 rate changes. Gross tax liability also increased despite the lower effective rate.
However, growth in taxable supplies does not, by itself, establish how many new businesses entered the GST system. It measures the value of reported supplies, not the number of registered taxpayers. The figures also do not prove that rate rationalisation alone caused the increase.
The broader policy objective is to bring more businesses into the formal tax system and improve the accuracy of transaction reporting by existing taxpayers.
GST Process Reforms and Their Business Impact
At its October 2026 meeting, the GST Council recommended changes to simplify registration, improve return reporting, speed up eligible refunds and reduce avoidable disputes. These recommendations still require the relevant implementation steps wherever applicable.
1. Simpler GST registration
The Council recommended clearer guidance on registration documents, a more user-friendly GST portal and changes to registration amendment and cancellation procedures. These measures are intended to reduce unnecessary queries and delays.
The Council also recommended a simplified registration route for eligible small suppliers, who sell goods through e-commerce operators in states where they have no physical presence. The proposed mechanism would operate subject to prescribed conditions, including the applicable input tax credit (ITC) limit.
2. Better return and ITC reconciliation
The Council recommended changes to improve reconciliation between GSTR-1, GSTR-1A and GSTR-3B. Other proposed electronic statements would help businesses report reverse-charge tax payments, ITC claims, reversals and reclaims more accurately.
The GST Council has recommended that the revised mechanism for correcting liability and ITC mismatches take effect from the April 2027 return period, subject to official implementation. Businesses should continue following the existing filing requirements until the changes become applicable.
3. Faster processing of eligible refunds
The recommendations include more automated refund processing. Under the proposed first phase, 90% of eligible refund claims relating to zero-rated supplies and inverted duty structure could be sanctioned provisionally through a system-based process, subject to risk assessment.
Faster processing could improve working capital for eligible businesses, particularly exporters and businesses facing inverted duty structures. The proposed mechanism should not be treated as an unconditional guarantee of a refund.
4. Clearer notices and dispute resolution
The Council recommended common guidelines for tax notices, adjudication and appeal orders. The proposals also include a minimum tax threshold of ₹10,000 for issuing show-cause notices, subject to the relevant legal changes taking effect.
These measures aim to make tax administration more consistent and reduce avoidable litigation. Businesses must continue to respond to existing notices and meet current legal obligations.
Proposed Changes to GST Administration
A permanent 12-member Standing Committee was planned to replace several existing GST officers’ committees, according to a Financial Express report. The proposed panel would include five representatives from large states, four from medium-sized states and three from smaller states.
The report said representation would take account of GST revenue, taxpayer numbers and geographical spread. The arrangement is intended to provide a more coordinated way to examine GST-related issues and proposals.
The report also said the GST Network (GSTN) was expected to develop systems to support the recommended reforms. Effective implementation will depend on the readiness of these systems and the relevant legal and procedural changes.
What Businesses Should Do Now
Businesses should focus on the compliance steps that already apply to them:
- Reconcile returns: Compare GSTR-1 and GSTR-3B with sales records and accounting data. Review mismatches before filing.
- Verify ITC: Check that claimed credit is eligible and supported by the required records.
- Maintain invoices: Keep sales invoices, purchase records, credit notes and supporting documents accurate and complete.
- Review refunds: Track pending refund applications and retain the documents required to support each claim.
- Monitor notifications: Check the relevant notifications and implementation dates before relying on a recommended change.
MSMEs and e-commerce sellers should pay particular attention to the proposed registration and compliance measures. Businesses can also refer to our GST Council reforms guide for MSMEs for a practical explanation of the recommendations.
For a wider overview of the changes, see our GST Council reforms and compliance guide.
Setindiabiz Support
Setindiabiz supports startups, MSMEs and established businesses with GST registration, amendments, return filing and reconciliation. As GST procedures evolve, accurate invoices, timely filings and proper ITC records remain essential. The Setindiabiz team supports businesses in managing routine GST compliance and organising the records needed for reporting and refunds. This allows business owners to focus on operations while keeping track of their compliance obligations.
FAQs
A wider tax base, better transaction reporting and improved compliance are expected to support future GST revenue growth. The reported increase in taxable supplies is an encouraging indicator, but it does not by itself establish the number of new taxpayers.
Not all. The GST Council has recommended several changes, but businesses should check the relevant notifications and implementation dates before applying them.
No. Taxable supply measures the value of reported supplies. It does not directly measure the number of new GST registrations.
The latest GST developments point towards greater emphasis on accurate reporting, wider tax participation and more efficient administration. Businesses should continue reconciling returns, checking ITC claims and maintaining reliable records. They should also track official notifications as the recommended reforms move towards implementation.
