The 57th GST Council has recommended changes to demand notices and penalties under Sections 73, 74 and 74A of the Central Goods and Services Tax Act, 2017. The proposals include a combined ₹10,000 threshold for show-cause notices, a 5% reduced penalty in specified non-fraud cases, and removal of the minimum ₹10,000 penalty in non-fraud cases. These are recommendations, not confirmed operative changes: the Ministry of Finance release does not establish whether they were later enacted or when they may commence.
What the Council recommended
The 57th GST Council meeting took place in New Delhi on 8 October 2026, chaired by Union Finance and Corporate Affairs Minister Nirmala Sitharaman. The Ministry of Finance’s official release describes the Section 73, 74 and 74A measures as recommendations for amendments to the CGST Act.
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- A minimum threshold for issuing show-cause notices: no notice would be issued when the tax amount involved is less than ₹10,000, calculated across CGST, SGST, IGST and cess.
- A proposed rule for qualifying notices and appeals below ₹10,000 that are pending when the threshold provision comes into force: they would be decided as if the threshold had applied when the notice was issued.
- A penalty amount would be deemed a “charge” where the full tax, interest and penalty are voluntarily paid within the specified time limit.
- In non-fraud cases, a reduced penalty of 5% would apply if tax and interest are paid within the specified period after the adjudication order: 30 days under Section 73 or 60 days under Section 74A.
- The minimum ₹10,000 penalty would be removed for non-fraud cases.
The Council’s recommendation does not itself make these provisions operative. The official release does not verify subsequent enactment or a commencement date, so the proposals should not be treated as rules currently in force on the basis of that release alone.
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The threshold is described as applying to the tax amount involved, with CGST, SGST, IGST and cess considered together. The release states: “Thus, no notices will be issued if the tax amount involved is less than Rs. 10,000/-.” That is the Council’s proposed threshold as reported by the Ministry of Finance, not confirmation of a current legal exemption.
The distinction is “less than ₹10,000”: the release does not say that a tax amount of exactly ₹10,000 falls below the threshold. It also does not establish a taxpayer-specific result; the amount and components in an individual matter would need to be assessed under any enacted and commenced provision.
What the pending-matter proposal says
The Council recommended that notices and appeals involving less than ₹10,000 and pending when the threshold provision comes into force be decided as if the threshold had applied on the date the notice was issued. The provision is therefore tied to the eventual commencement date. The release does not say that a pending notice is automatically invalid now, or establish how a particular pending case would be decided.
When the proposed 5% penalty could apply
The reduced penalty proposal is limited to non-fraud cases and requires payment of both tax and interest within a specified period after the adjudication order. The Council’s stated time periods differ by section:
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| Case classification | Section | Payment condition in the recommendation | Proposed penalty |
|---|---|---|---|
| Non-fraud | 73 | Pay tax plus interest within 30 days of the adjudication order | 5% |
| Non-fraud | 74A | Pay tax plus interest within 60 days of the adjudication order | 5% |
The release does not extend this reduced-penalty proposal to fraud cases. It also does not provide enough detail to determine a particular taxpayer’s classification or outcome. Those depend on the applicable law and case facts, as well as whether the recommendation has been enacted and commenced.
Other GST Council recommendations announced with these measures
The same release includes separate proposals that should not be confused with the amendments to Sections 73, 74 and 74A:
- Reduce Section 125’s maximum general penalty from ₹25,000 to ₹10,000.
- Set a ₹40 crore upper limit on pre-deposit for appeals before the Appellate Authority or Appellate Tribunal where an order involves only a penalty and no tax demand. The proposed split is ₹20 crore under CGST and ₹20 crore under SGST/UTGST.
These, too, are presented in the release as Council recommendations, not as confirmation that the changes are in force.
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The official Ministry of Finance release confirms that the GST Council recommended the changes on 8 October 2026. It does not establish that Parliament subsequently enacted them, that a commencement date has been notified, or that a circular has been issued. To determine the current position, check the latest official amendment and commencement instruments and any relevant official clarification. A Council recommendation alone is not enough to conclude that a notice or penalty has changed for a particular case.
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