GST simplification journey from Budget 2023 to FY 2026-27: decriminalisation, e-commerce composition, ITC reforms, GSTAT, and return filing time limits.
Union Budget 2026 has carried forward the spirit of GST simplification that began in Budget 2023, with a clear focus on technology-led compliance, dispute resolution, and tighter input tax credit (ITC) eligibility. For taxpayers navigating the post-2023 GST landscape, understanding the cumulative simplifications is essential — many changes that began as Budget 2023 proposals are now mature features in FY 2026-27. Here is a refreshed view of where the simplification journey stands today.
Decriminalisation and threshold relief
Budget 2023 increased the monetary threshold for launching prosecution under Section 132 of the CGST Act from ₹1 crore to ₹2 crore for most offences, retaining a stricter regime only for fake invoicing. This change persists. The compounding range was reduced from 50–150 per cent to 25–100 per cent of tax involved, easing settlement of inadvertent breaches. Practical effect: more disputes are resolved through adjudication and compounding rather than criminal prosecution.
Composition scheme for e-commerce sellers
Goods suppliers operating exclusively through e-commerce operators were enabled to opt into the composition scheme — a significant shift since e-commerce sellers were earlier ineligible. For FY 2026-27, small sellers on Amazon, Flipkart, Meesho, and similar platforms with intra-state supplies within the ₹1.5 crore turnover threshold can avail the simplified composition levy if other conditions are met.
Input tax credit tightening
- Section 17(5) was amended to deny ITC on CSR-related expenditure under Section 135 of the Companies Act, 2013.
- ITC restrictions on supplies under Section 17(5)(d) for construction of immovable property on own account were clarified.
- Section 16(2) now requires recipients to reverse ITC where the supplier has not paid tax within the prescribed time, with re-credit when the supplier pays.
- Tighter alignment of GSTR-2B with GSTR-3B has reduced provisional credit availability to nil.
Return filing rationalisation
The time limits for filing returns under Sections 37 (outward), 39 (monthly/quarterly), 44 (annual), and 52 (TCS) have been capped at three years from the due date. Beyond that, returns cannot be filed without specific permission. This was intended to close the long tail of late filings and reconcile the system. For FY 2026-27, taxpayers must ensure all pending returns are filed in time, as condonation has become rarer.
OIDAR and online gaming
Online Information and Database Access or Retrieval (OIDAR) services definitions were widened to capture more cross-border digital service providers, plugging revenue leakage. Online gaming, casinos, and horse racing now attract GST at 28 per cent on the full face value of bets, a position settled through the GST Council decisions following Budget 2023. Indian gaming platforms have restructured their pricing accordingly.
Dispute resolution and GSTAT
The GST Appellate Tribunal (GSTAT) has been operationalised with state benches functioning across India. Disputes now have a structured appellate forum, reducing High Court burden. The GST Amnesty Schemes notified periodically by CBIC have allowed taxpayers to settle legacy disputes at concessional rates.
Conclusion
The simplification narrative initiated in Budget 2023 has compounded through subsequent budgets and GST Council meetings into a tangibly easier regime in FY 2026-27. Smaller taxpayers benefit from threshold relief and composition extensions, while larger taxpayers face tighter ITC discipline. Stay current with CBIC notifications and treat your GST compliance as a monthly hygiene activity rather than a year-end scramble.
