No UPI MDR discussion at GST Council meet; rates unchanged, ITC protection among key takeaways
The Council also made no changes to GST rates, with the Finance Ministry saying the rate structure is now settled. The focus has shifted towards improving how GST works for businesses and taxpayers, including registration, returns, refunds and input tax credit.
- Oct 8, 2026,
- Updated Oct 8, 2026 5:45 PM IST
The 57th GST Council meeting did not discuss any proposal related to Merchant Discount Rate (MDR) on UPI transactions, Finance Minister Nirmala Sitharaman said on Thursday, while the Council kept GST rates unchanged and focused instead on compliance reforms, faster refunds and protection of genuine taxpayers.
“There was no MDR-related discussion in the GST Council meeting today,” Sitharaman said at a press briefing following the meeting.
The Council also made no changes to GST rates, with the Finance Ministry saying the rate structure is now settled. The focus has shifted towards improving how GST works for businesses and taxpayers, including registration, returns, refunds and input tax credit.
A key proposal discussed at the meeting relates to protecting bona fide taxpayers from losing input tax credit (ITC) because of a supplier’s default higher up in the value chain.
“There was an agenda on amending Section 162C of the CGST Act, where the ITC passed on to the final genuine taxpayer was blocked or reversed when any one of the suppliers in the value chain allegedly failed to deposit the ITC accrued or passed fake ITC,” Sitharaman said.
The proposed change is aimed at ensuring that a genuine taxpayer that has complied with its obligations does not automatically lose ITC because another entity in the supply chain failed to deposit tax or passed on fake credit.
The Council also approved significant changes to the GST refund process. The time limit for acknowledgement of a refund claim will be reduced from 15 days to 10 days. If neither an acknowledgement nor a deficiency memo is issued within 10 days, the claim will be treated as acknowledged.
More significantly, 90% of refund claims will be sanctioned by the system based on risk assessment, with the order to be issued within three working days of acknowledgement, compared with seven days currently.
The move is expected to improve cash-flow management for businesses by reducing the time for which eligible refunds remain locked in the tax system.
The Council said 65% of refund claims are related to exports or an inverted rate structure, while 55% of these claims are already classified as low risk. Another 19% of refund claims relate to balances lying in the cash ledger, representing money already with the government.
Refunds of excess balances in the cash ledger will also become fully automatic, with no officer involvement.
The wider reforms reflect a shift towards technology-led, risk-based GST administration. The system now matches seller and buyer invoices and uses network analysis to identify fake credit, allowing enforcement to increasingly rely on detection rather than routine intervention.
The Council also proposed measures to simplify registration, returns and business closure, while easing compliance for smaller taxpayers.
With GST rates left unchanged, the latest meeting marks a shift from rate rationalisation towards making the tax system faster, more automated and less burdensome for compliant businesses.
The 57th GST Council meeting did not discuss any proposal related to Merchant Discount Rate (MDR) on UPI transactions, Finance Minister Nirmala Sitharaman said on Thursday, while the Council kept GST rates unchanged and focused instead on compliance reforms, faster refunds and protection of genuine taxpayers.
“There was no MDR-related discussion in the GST Council meeting today,” Sitharaman said at a press briefing following the meeting.
The Council also made no changes to GST rates, with the Finance Ministry saying the rate structure is now settled. The focus has shifted towards improving how GST works for businesses and taxpayers, including registration, returns, refunds and input tax credit.
A key proposal discussed at the meeting relates to protecting bona fide taxpayers from losing input tax credit (ITC) because of a supplier’s default higher up in the value chain.
“There was an agenda on amending Section 162C of the CGST Act, where the ITC passed on to the final genuine taxpayer was blocked or reversed when any one of the suppliers in the value chain allegedly failed to deposit the ITC accrued or passed fake ITC,” Sitharaman said.
The proposed change is aimed at ensuring that a genuine taxpayer that has complied with its obligations does not automatically lose ITC because another entity in the supply chain failed to deposit tax or passed on fake credit.
The Council also approved significant changes to the GST refund process. The time limit for acknowledgement of a refund claim will be reduced from 15 days to 10 days. If neither an acknowledgement nor a deficiency memo is issued within 10 days, the claim will be treated as acknowledged.
More significantly, 90% of refund claims will be sanctioned by the system based on risk assessment, with the order to be issued within three working days of acknowledgement, compared with seven days currently.
The move is expected to improve cash-flow management for businesses by reducing the time for which eligible refunds remain locked in the tax system.
The Council said 65% of refund claims are related to exports or an inverted rate structure, while 55% of these claims are already classified as low risk. Another 19% of refund claims relate to balances lying in the cash ledger, representing money already with the government.
Refunds of excess balances in the cash ledger will also become fully automatic, with no officer involvement.
The wider reforms reflect a shift towards technology-led, risk-based GST administration. The system now matches seller and buyer invoices and uses network analysis to identify fake credit, allowing enforcement to increasingly rely on detection rather than routine intervention.
The Council also proposed measures to simplify registration, returns and business closure, while easing compliance for smaller taxpayers.
With GST rates left unchanged, the latest meeting marks a shift from rate rationalisation towards making the tax system faster, more automated and less burdensome for compliant businesses.