57th GST Council: what changes for small kitchens and shops

The 57th GST Council meeting on 8 Oct 2026 recommended lower penalties, a late fee waiver for small taxpayers who file within the month, a ₹10,000 floor for tax notices and some new input tax credit, but it changed no GST rates on food or clothing. None of it is law yet: as of 18 Oct 2026 no notification or Act amendment has been issued, so you keep filing and paying exactly as before.

This post goes item by item through what the Council said, who it actually helps among home kitchens, cloud kitchens and small shops, and where each item stands today. Every line links back to the official PIB release of 8 Oct 2026 or the Council's FAQ on the recommendations.

What did the 57th GST Council meeting decide for small businesses?

The Council met in New Delhi on 8 Oct 2026. The 56th meeting last year was about rates; this one was about process: registration, returns, refunds, notices and penalties. The PIB release ends with a line every reader should take seriously: the recommendations "would be given effect through the relevant circulars/ notifications/ law amendments which alone shall have the force of law."

So there are two questions for each item. What will change, and has it changed yet? For a small business, the answer to the second one is "not yet" for all of them.

Here is the short list that matters to a home kitchen, a cloud kitchen or a garment shop.

Which 57th Council recommendations are law yet?

None. A Council recommendation becomes law in one of two ways. Rule changes and rate changes need a CBIC notification. Anything written into the CGST Act itself, such as the ₹25,000 figure in section 125, needs Parliament and each state legislature to amend their GST Acts. The effective date is whatever that notification or amendment says.

On 10 Oct 2026, CBIC said on X that the delivery tax had been reduced to 5%, in reply to a viral post about a new tax (news report, a secondary source). That reply was about the direction of the change. We could not find a rate notification behind it on CBIC's portal, so treat the 5% as pending too. Only two dates were given in the release, and both are for refunds: input services credit from 1 Nov 2026 and capital goods credit from 1 Apr 2027. Neither touches a typical small kitchen or shop.

Is the GST late fee waived if I file by month-end?

Not yet, and it will be narrower than most headlines suggest. The Council recommended waiving the late fee on a delayed return under section 39(1) of the CGST Act, for taxpayers with turnover up to ₹5 crore in the previous financial year, "if the said delayed return is filed by the end of the month in which it was due."

Three details the summaries skip:

• Which return. Section 39(1) is the regular monthly or quarterly return, GSTR-3B. Section 39(1) itself excludes people paying tax under section 10, so a composition kitchen or shop is not covered by this wording.
• Which month. The grace runs to the end of the month in which the return was due, not the month after. A return due on 20 Nov would be fee-free if filed by 30 Nov, and would attract a late fee from 1 Dec.
• What it does not cover. The release mentions late fee only. Interest on tax paid late is a separate charge and nothing in the release waives it.

Until it is notified, a return filed even one day late attracts the normal late fee.

Is the GST penalty under section 125 reduced to ₹10,000?

Recommended, not done. Section 125 is the catch-all penalty for breaking a GST rule that has no specific penalty of its own. Today it says the penalty "may extend to twenty-five thousand rupees." The Council recommended cutting that ceiling to ₹10,000. It is a maximum, so an officer can still levy less.

The more useful change for small businesses is the notice floor. The Council recommended amending sections 73, 74 and 74A so that no show cause notice (SCN, the formal demand that starts a tax dispute) is issued when the tax involved is below ₹10,000. The FAQ explains how the ₹10,000 is counted.

Say a mismatch shows ₹4,500 CGST and ₹4,500 SGST short. That is ₹9,000 in total, below the floor, so no notice once the change is in force. If it were ₹5,000 each, the total is ₹10,000, and the FAQ says exactly ₹10,000 meets the floor, so a notice can go out. Interest, late fee and penalty are left out of the count. Wrongly claimed ITC counts as tax.

The Council also wants pending notices and appeals below ₹10,000 decided as if the floor had applied from the start. That too waits for the amendment.

Can restaurants and caterers claim more ITC now?

Less than the headlines say, and not yet. ITC means input tax credit, the GST you paid on purchases that you subtract from the GST you owe. There are two separate items.

Same-line ITC. Restaurant service at 5% comes without ITC (see the 56th Council's rate tables). The 57th Council recommended limited ITC "in the same line of business" for restaurant and outdoor catering services. The FAQ is clear that this is "only the limited input tax credit in respect of same category of input service." In practice: a caterer who hires another caterer for part of a wedding order could take credit on that caterer's bill. A cloud kitchen still gets no credit on vegetables, packaging, gas or rent. Some summaries say restaurants can now claim ITC on purchases used for restaurant service. The FAQ does not support that.

Outdoor catering in s.17(5). Section 17(5) blocks credit on several things a business buys, including "food and beverages, outdoor catering". The Council recommended removing the block on outdoor catering. That helps the buyer: a registered shop that orders catering for a business event could claim the GST on the caterer's bill. If you are the caterer, it may make you more attractive to business clients. The release does not say that the "food and beverages" block goes too, so do not assume it.

What is the ARQP quarterly payment scheme?

ARQP is Annual Return Quarterly Payment: you would file once a year and pay tax every quarter. The Council "approved in-principle a concept note" for an optional scheme for businesses with turnover up to ₹5 crore in the previous year that sell only to unregistered buyers (B2C).

That is the earliest possible stage. There are no forms, rules or start date, and the eligibility details could change. On paper it fits many home kitchens and small shops, since most of their customers are not GST-registered. A single B2B sale might rule you out, but that depends on rules not yet written. Until then, stay on your current filing scheme.

What changes for food delivery apps and online sellers?

Delivery charges on apps. Since the 56th Council, local delivery booked through an app has been taxed at 18%, with the app paying it under section 9(5) when the delivery person is not liable to register. The 57th Council recommended 5% without ITC for delivery services booked through apps, other than courier and postal, whoever pays it (FAQ, Q15–16). On a ₹40 delivery fee, that is ₹2 of GST instead of ₹7.20. This is on the customer's delivery fee. It does not change the 5% the app already pays on your food sales. If you deliver yourself and add a delivery charge to your own bill, this item does not apply to you.

Section 9(5) wording. The app already pays GST on restaurant service sold through it. The Council wants section 9(5) amended to make that liability clear "irrespective of the business models" the app uses. Nothing for you to do. Whether you need to register at all is covered in GST registration for home kitchens on Swiggy and Zomato.

Rule 14B for online goods sellers. A garment shop selling through a marketplace in another state could register there by declaring the marketplace's warehouse as its principal place of business, with automatic approval, if it passes on no more than ₹2.5 lakh of ITC a month. This is for goods, not restaurant service.

What should a small business do now?

Nothing changes until a notification or an amended Act says so. Until then:

1. File on the current due dates. The month-end grace is not in force. A late return today still attracts a late fee.
2. Do not claim new ITC. Neither the same-line credit nor the outdoor catering credit exists yet. Claiming early can bring a notice with interest.
3. Keep your current filing scheme. ARQP does not exist yet.
4. Keep billing at today's rates. Restaurant service stays at 5%, and so do clothing rates. Make sure each bill shows the right rate and HSN or SAC; our guide on sending a GST bill on WhatsApp covers what a bill must carry.
5. Check before your next return. Ask your CA whether anything was notified that month, and which date it applies from.

If you run a home kitchen and are still sorting out the basics, FSSAI registration for a home kitchen comes before any of this.