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GST Council Scraps Arrest Powers, Raises Prosecution Threshold to Rs 5 Crore
The GST Council met to decide how India’s goods and services tax should work.
It removed tax officers’ power to arrest people under GST and raised the amount involved before a prosecution can be started.
Judges will decide what punishment is appropriate in cases that do go to court.
The Council also lowered a general penalty and approved steps to make some tax refunds faster.
It agreed to simplify parts of registration and filing, and to make checks on goods in transit more limited.
A group of officials will study how to protect honest buyers if their suppliers fail to meet tax rules.
The Council did not change GST rates.
One report said the reforms are due to take effect on April 1, 2027.
At its 57th meeting, the GST Council removed GST officers’ power of arrest and raised the prosecution threshold from Rs 1 crore to Rs 5 crore.
The minimum punishment was removed, leaving decisions on fines, imprisonment, or both to judicial discretion; the general penalty was reduced from Rs 25,000 to Rs 10,000.
Refund claims will be acknowledged within 10 days, and 90% of eligible claims will be processed within three working days after acknowledgement following risk assessment.
The Council approved process changes for registration, returns, transit inspections, and small e-commerce sellers, while asking officers to study safeguards for genuine buyers’ input tax credit.
GST rates were unchanged; the Finance Ministry said rate changes would be considered once a year, and one report said the reforms would begin April 1, 2027.
- Who
- The GST Council, chaired by Union Finance Minister Nirmala Sitharaman.
- What
- It approved scrapping GST officers’ arrest powers, raising the prosecution threshold to Rs 5 crore, and other compliance and process reforms; GST rates were unchanged.
- Where
- New Delhi.
- When
- Thursday, at the Council’s 57th meeting; one report said the reforms would be implemented from April 1, 2027.
- Why
- The stated focus was simplifying GST processes, easing compliance, and improving ease of doing business.
Reform rationale
Compliance concerns
Changes to GST enforcement
Reform rationale
The Council and Finance Ministry described the changes as a shift toward simpler, less burdensome compliance, with enforcement relying more on data and analytics.
Compliance concerns
Businesses had complained about stringent tax practices; the Council’s separate review of genuine buyers’ input tax credit reflects an unresolved concern about buyers being affected by supplier defaults.
Key facts
- Meeting
- 57th GST Council meeting, chaired by Finance Minister Nirmala Sitharaman
- Prosecution threshold
- Raised from Rs 1 crore to Rs 5 crore
- General penalty
- Reduced from Rs 25,000 to Rs 10,000 where no specific penalty applies
- Refund acknowledgement
- Time limit reduced from 15 days to 10 days
- Eligible refund processing
- 90% of eligible claims to be sanctioned following risk assessment, with an order within three working days of acknowledgement
- Genuine buyers’ input tax credit
- A committee of officers will study protections and report within three months
- GST rates
- No rate changes were approved at the meeting
- Reported implementation date
- April 1, 2027, according to one report
Quotes
Nirmala Sitharaman
India’s Finance Minister, who announced the GST Council’s decisions.
“The Committee of Officers will complete its study within three months, and an agenda will be placed before the next Council meeting.”
deccanchronicle.com
“The rate structure is settled, so the Council has turned to how the tax works day to day”
deccanchronicle.com
Sources
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