THEBUSINESSBYTES BUREAU

NEW DELHI, OCTOBER 4, 2026

The GST Council is likely to consider a slew of measures aimed at easing compliance and resolving implementation issues at its meeting on October 7, with proposals to allow input tax credit (ITC) on group health and life insurance premiums paid by employers and motor vehicles taken on lease, rent or hire, according to sources.

The proposed changes could provide relief to employers who currently bear 18 per cent GST on group health and life insurance policies for employees but, in most cases, are unable to avail themselves of ITC on the tax paid.

The Council may also examine extending ITC benefits to motor vehicles acquired through lease, rent or hire arrangements. The proposals are part of a broader effort to address issues arising from the implementation of the GST regime and streamline the compliance framework.

The Council is also expected to consider easing prosecution provisions under the GST law. The GST Law Panel has proposed raising the threshold for tax evasion that could trigger prosecution and reducing the jail terms prescribed for certain GST offences.

Under the proposed framework, criminal action could be confined largely to serious violations, potentially reducing the number of GST cases that lead to criminal proceedings.

The recommendations are expected to be placed before the Council for consideration at its October 7 meeting.

Unlike previous meetings that have centred on GST rate changes, the upcoming deliberations are unlikely to involve any major rate rationalisation, according to Finance Ministry sources.

The Council is expected to focus instead on “process reforms” and the implementation of the rate rationalisation undertaken recently. It may review how the revised GST rates have worked over the past year and assess their impact across sectors.

The emphasis is likely to be on ironing out implementation-related difficulties, addressing anomalies and taking stock of the impact of the rate changes rather than undertaking another broad-based round of rate cuts.

The proposed ITC measures and changes to prosecution provisions, if approved, could mark a significant shift towards simplifying the GST compliance architecture while reducing the scope for criminal proceedings in less serious cases.