Next-Gen GST 2.0 Reforms: GST Council May Ease Compliance Rules, Free Up Thousands of Crores in ITC:

India is planning major reforms to the Goods and Services Tax (GST) regime. The move is aimed at freeing up thousands of crores of amassed Input Tax Credit (ITC), simplifying the compliance process, and increasing the limit for prosecution, with emphasis on decriminalisation of economic offences.

Some proposals, such as rationalisation of the provisions governing logistics and transit checks and eliminating powers to arrest under GST law, will be considered during the GST Council Meeting scheduled for Wednesday (October 07, 2026).

The proposals cover all major areas of GST compliance, including registration, returns, refunds, input tax credit and litigation. They aim to move GST administration from complex procedures to a more automated, data-driven and risk-based system, according to individuals familiar with the matter.

One among them stated, "Safeguards imposed in the early years of GST can be relaxed without weakening enforcement because of the availability of data and advancement of systems."

GST 2.0 - Now businesses will receive GST ITC credits on vehicle purchases, running costs, and insurance for employees. No Arrest power for Tax Officers https://t.co/Le9hSdK8xd

— October 5, 2026