The 57th GST Council recommended changes affecting specified passenger transport, e-commerce delivery, business expenses, exemptions, refunds and GST reporting. They are proposals, not automatically effective law: the Council said they must be given effect through the relevant notifications, circulars or amendments, which alone have legal force. Check the applicable instrument and commencement date before changing tax treatment or filing a return.
The Council met in New Delhi on 8 October 2026 under Union Finance and Corporate Affairs Minister Nirmala Sitharaman. Its service-related recommendations include rate changes, exemptions, input tax credit (ITC) provisions and clarifications. The details matter: several proposals apply only to specified suppliers, recipients, transaction channels or locations.
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Proposed rates for specified transport and delivery services
| Service | What the Council recommended | Conditions and limits |
|---|---|---|
| Passenger transport and vehicle rentals using electric vehicles | An option to pay GST at 5%, with restricted ITC | The proposal covers passenger-transport services and rentals of motor vehicles with operators using an electric vehicle when battery-charging costs are included in the consideration. It is not a general 5% rate for every EV-related supply. |
| Specified delivery services supplied through an electronic commerce operator (ECO) | 5% GST without ITC | This branch concerns delivery services other than courier and postal services, supplied through an ECO by a supplier not liable for registration under section 22(1) of the CGST Act. The proposed treatment is under section 9(5). |
| Delivery services related to goods supplied or ordered through an ECO | 5% GST without ITC | This is a separate delivery category tied to goods supplied or ordered through an ECO; do not conflate it with the supplier and service conditions in the preceding row. |
| Goods transport agency (GTA) services related to goods supplied or ordered through an ECO | Removal of a stated exemption | The recommendation concerns transportation of goods to unregistered persons when related to goods supplied or ordered through an ECO. |
The two delivery-service proposals have different descriptions and conditions, while the GTA item concerns removal of a stated exemption. A headline rate alone does not establish which branch applies to a particular transaction.
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Proposed exemptions and eligibility mechanisms
| Service or activity | Recommendation | Scope stated by the Council |
|---|---|---|
| Helicopter passenger transport | Exemption | Seat-sharing passenger transport to or from airports or helipads in the north-eastern states, Sikkim and Bagdogra in West Bengal. |
| Storage or warehousing of seeds | Exemption | Seeds must be meant for sowing. |
| Coffee curing | Exemption | Agricultural support services of curing coffee when supplied by coffee curers to cultivators. |
| Seamen’s Provident Fund Organisation (SPFO) services | Exemption | Services supplied by the SPFO to persons governed by the Seamen’s Provident Fund Act, 1966. |
| Research and development (R&D) services | Self-certification mechanism proposed for determining eligibility under Entry 44A of Notification 12/2017–Central Tax (Rate) | The head of the institution or organisation undertaking the work would certify that the activity is R&D and not consultancy. This is an eligibility mechanism, not a blanket exemption for all R&D services. |
| Services imported by an Indian establishment of a foreign shipping company | Exemption, with past-period regularisation on an “as is where is” basis | The service must be supplied without consideration by a related person or an overseas establishment of that company. |
| Highway concessions under the Toll Operate Transfer (TOT) model | Exemption for a specified grant by government bodies | The grant is of an exclusive right, licence and authority to a concessionaire to demand, collect and appropriate toll fees for highway projects. |
Proposed ITC treatment and valuation clarifications
Limited same-line-of-business ITC
The Council recommended limited ITC in the same line of business for restaurant and outdoor-catering services, hotel accommodation up to ₹7,500 per unit per day, and gym or fitness services. The proposed treatment would be similar to that already available for specified passenger transport, tour operator and motor-vehicle rental services. The recommendation does not spell out the precise conditions; those need to be checked in the implementing text.
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Vehicle leasing recoveries
The Council recommended a clarification on the GST treatment of statutory and ancillary amounts a lessor incurs and later recovers from a lessee in connection with vehicle leasing. The examples identified are registration charges, road tax, insurance and FASTag charges. The recommendation does not provide the detailed tax calculation.
Bank Funds Transfer Pricing
The proposed clarification would treat a notional amount regarded as interest in bank accounts for notional inter-branch fund transfers under Funds Transfer Pricing as covered by the definition of “interest” in Notification 12/2017-Central Tax (Rate).
TOT concessionaire operation and maintenance
Alongside the proposed exemption for the specified highway concession grant, the Council recommended a special procedure governing valuation and the timing of GST payment on operation and maintenance services supplied by concessionaires to the concessioning authority under the TOT model.
Cross-sector export, refund and return proposals
Export-related and place-of-supply changes
The Council proposed removing a distinct-person condition for certain services involving foreign offices or branches when deciding whether a supply qualifies as an export of services. It also proposed a change to place-of-supply treatment for certain services where the recipient makes goods physically available to the supplier, and a specified deemed-supply treatment for goods delivered to an overseas buyer in an SEZ or FTWZ, subject to payment conditions. These measures may facilitate export-related benefits, but do not automatically make every cross-border arrangement an export of services.
Refund access for accumulated ITC
| Refund proposal | Timing recommended | Key qualification |
|---|---|---|
| Accumulated ITC on input services for specified inverted-duty-structure claims | For ITC availed on or after 1 November 2026 | Applies to specified claims; the date does not remove underlying eligibility rules. |
| Qualifying capital-goods ITC for zero-rated and inverted-duty-structure claims | For ITC availed on or after 1 April 2027 | The refund would be spread over 60 months. |
Phased system-based refund processing
The Council recommended a phased approach:
- Phase 1: Automatic sanction of the full excess balance in an electronic cash ledger; a 10-day period for issuing an acknowledgement or deficiency memo, with system-deemed acknowledgement if neither is issued; and automatic provisional sanction of 90% for specified zero-rated and inverted-duty-structure refunds, subject to system risk identification and evaluation.
- Phase 2: Automatic acknowledgement following system verification and automatic sanction of full zero-rated-supply refunds in acknowledged cases, after pending dues and risk assessment.
Return reporting and reconciliation
Proposed mechanisms cover reconciliation of GSTR-1, GSTR-1A or the Invoice Furnishing Facility (IFF) with GSTR-3B; reporting and correction of reverse-charge liabilities and ITC; invoice management; and credit reversal and reclaim. The Council recommended that the alternate mechanism for amending liability and ITC reporting may apply from the return for April 2027. It also recommended a time-bound public consultation on the proposed mechanism.
For service businesses, these reporting proposals make reconciliation and review of ITC records relevant, but the recommendations do not identify a required product or vendor. The final forms, procedures and effective dates depend on the implementing measures.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to assess a proposed change for your service
- Identify the precise supply. Distinguish, for example, an ECO delivery service from courier or postal service, and passenger transport from a vehicle rental with an operator.
- Match the stated conditions. Check supplier registration status, recipient, transaction channel, geography, seat-sharing, included charging costs and any other limitation stated for the proposal.
- Check the ITC consequence. A proposed 5% rate without ITC, a rate with restricted ITC, a limited same-line-of-business credit and an exemption are different treatments.
- Verify the operative instrument. Locate the relevant notification, circular or law amendment and confirm its commencement date before applying a recommendation to invoices, refunds or returns.
The primary source is the Ministry of Finance’s Press Information Bureau release, “Recommendations of the 57th Meeting of the GST Council,” dated 8 October 2026. The release says that its summaries are for stakeholder information and that the recommendations take legal effect only through the relevant circulars, notifications or law amendments.
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