GST Council May Address Input Tax Credit Rules, Safe Harbour For Bona Fide Recipients And Litigation

New Delhi, October 5, 2026: Industry participants on Monday said they expect the GST Council to address issues related to input tax credit and adopt statutory safe-harbour protections for bona fide recipients.

The statement from industry chamber PHDCCI listed expectations including amendment of Section 16(2)(c), so that a recipient holding a valid invoice, having received the supply, paid through banking channels and not colluding, retains input tax credit, with recovery directed first against the defaulting supplier.

Industry Seeks Credit Relaxations

Industry also seeks relaxation of blocked credits under Section 17(5) for motor vehicles, food and beverages, outdoor catering, beauty and health services, club membership and travel benefits. Industry seeks credit for all business-use expenditure recorded in the books, the report noted.

Industry also wants to reduce litigation and also seeks clear transitional language "covering interest/penalty-only demands and Rule 142 / DRC-07 recoveries."

It expects that amounts paid on voluntary settlement be termed as charge, removing stigma and collateral consequences.

Industry Seeks Cess Clarity

Ashok Kumar Batra, Chair–Indirect Taxes Committee, PHDCCI, also asked for a time-bound mechanism to utilise or refund cess balances stranded after cess discontinuance.

Industry is also keen on a proposal to ease movement of credit across GSTINs of the same PAN, addressing accumulation in registrations with low output liability.

Further, it also noted expectations on proposals to bar notices where the tax demand is below Rs 10,000 or about 20 per cent of cases by number, extending to pending adjudication and appeals.

Expectations On Tribunal Functioning

On practical directions for the Tribunal's functioning, the industry chamber mentioned expectations around uniform e-filing, clarity on pre-deposit adjustment, clubbing of appeals under Rule 18 of the GSTAT Rules, and a departmental monetary threshold for filing appeals.

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The Union Finance Minister has publicly stated the meeting will take up only process reforms under "Next-Gen GST" and no rate proposals are expected after the two-slab rationalisation effective September 9, 2025.

(Disclaimer: Except for the headline, this article has not been edited by FPJ's editorial team and is auto-generated from an agency feed.)