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At its 57th meeting in New Delhi on 8 October 2026, the GST Council recommended amendments to Sections 73, 74 and 74A of the Central Goods and Services Tax Act, 2017. The headline proposals are a ₹10,000 floor below which no show-cause notice would be issued, a reduced 5% penalty in non-fraud cases where tax and interest are paid within a set window, and removal of the minimum ₹10,000 penalty in non-fraud cases.
These are recommendations. The official release does not show that they have been enacted or brought into force, and this article does not confirm either point. Treat each item as proposed until an operative amendment and its commencement date are published.
What the Council recommended
The meeting was chaired by Union Finance and Corporate Affairs Minister Nirmala Sitharaman. The Ministry of Finance’s Press Information Bureau (PIB) published the outcomes as recommendations for changes to the CGST Act. The PIB release on the 57th GST Council meeting is the primary record of what was recommended.
For Sections 73, 74 and 74A, the Council recommended that:
- no show-cause notice be issued where the tax amount involved is less than ₹10,000, with the threshold calculated across CGST, SGST, IGST and cess;
- notices and appeals below ₹10,000 that are pending when the threshold provision comes into force be decided as if the threshold had applied when the notice was issued;
- where the full tax, interest and penalty are voluntarily paid within the specified time limit, the penalty amount be deemed a “charge”;
- in non-fraud cases, a reduced penalty of 5% apply where tax and interest are paid within 30 days of the adjudication order under Section 73, or within 60 days under Section 74A;
- the minimum ₹10,000 penalty in non-fraud cases be removed.
The ₹10,000 notice threshold
The threshold is the most direct change for taxpayers. The PIB release states the principle in its paragraph 7.2: “Thus, no notices will be issued if the tax amount involved is less than Rs. 10,000/-.” Under this recommendation, the test is the tax amount involved, not the value of the transaction or the size of the taxpayer.
How the amount is counted
The recommended figure combines four components: CGST, SGST, IGST and cess. A matter is below the threshold only when the combined tax amount is under ₹10,000. A notice that is ₹6,000 under CGST and ₹5,000 under SGST, for example, would total ₹11,000 and fall outside the proposed floor, even though each component is individually below ₹10,000.
Notices and appeals already pending
The Council also recommended a transitional rule. Notices and appeals below ₹10,000 that are pending on the date the threshold provision takes effect would be decided as if the threshold had applied when the notice was issued. Whether a particular pending matter qualifies depends on its own combined tax amount and on the commencement date in the final legal text.
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Penalty changes under Sections 73 and 74A
The penalty proposals divide cases by fraud and non-fraud, and by the section under which the demand was raised. The table below summarises what the Council recommended. It does not replace the operative provisions.
| Scenario | Section 73 (proposed) | Section 74A (proposed) |
|---|---|---|
| Non-fraud case, tax and interest paid within the window after the adjudication order | 5% penalty if paid within 30 days | 5% penalty if paid within 60 days |
| Non-fraud case, minimum penalty | Minimum ₹10,000 penalty proposed for removal | Minimum ₹10,000 penalty proposed for removal |
| Fraud case | The reduced 5% rate is described only for non-fraud cases | The reduced 5% rate is described only for non-fraud cases |
The 5% rate is stated in the release, but the release summary does not describe what amount the 5% is calculated on. Check the operative text before applying it to a figure.
Voluntary payment and the “charge” label
The recommendation to deem the penalty amount a “charge” applies where the full tax, interest and penalty are voluntarily paid within the specified time limit. The release does not explain the legal consequence of that label, so the amended wording should be read for its practical effect.
Related proposals kept separate
Two further recommendations sit alongside the Section 73, 74 and 74A changes. They are not part of the three-section proposal and should not be read as amendments to those sections.
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Section 125 general penalty
The Council recommended reducing the maximum general penalty under Section 125 of the CGST Act from ₹25,000 to ₹10,000 (PIB paragraph 7.3).
Pre-deposit cap for penalty-only appeals
For appeals before the Appellate Authority or Appellate Tribunal where an order involves only penalty and no tax demand, the Council recommended an upper limit of ₹40 crore on pre-deposit. The release splits this into ₹20 crore under CGST and ₹20 crore under SGST/UTGST (PIB paragraph 7.4).
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What is and is not established
Contemporaneous coverage, including a report from Taxscan dated 9 October 2026, has asked whether GST notices below ₹10,000 will be issued and whether the Council’s recommendations are already law. Taxscan’s report on the 57th Council proposals is a useful secondary account, but the PIB release remains the primary source for what was recommended.
- Established by the PIB release: the Council recommended the threshold, the pending-matter rule, the deemed-charge treatment, the 5% reduced penalty and its payment windows, the removal of the minimum ₹10,000 penalty, and the Section 125 and pre-deposit figures.
- Not established here: whether Parliament has enacted any of these changes, the date they take effect, or whether any notification or circular has followed.
- Not established here: how many cases the proposals would affect or what savings they would produce. No such estimate appears in the sources reviewed.
- Not determinable from general reporting: the outcome for any individual taxpayer, which depends on the facts of that case and the operative text.
Checking a notice against the proposal
If you hold a notice and want to see how the proposal would bear on it, work through these points in order. This is an organising checklist, not legal advice.
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- Identify the section under which the demand was raised: Section 73, 74 or 74A.
- Add the tax amount under CGST, SGST, IGST and cess. Note whether the total is below ₹10,000.
- Confirm whether the matter was pending on the commencement date of any enacted threshold provision.
- For a non-fraud penalty, note the date of the adjudication order and whether tax and interest were paid within 30 days (Section 73) or 60 days (Section 74A).
- Check the commenced legal text and any notification before relying on the proposal. Until then, the existing notice and its deadlines stand as issued.
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