Archive · 8 Oct 2026
GST Council Scraps Arrest Powers, Raises Prosecution Threshold
India’s GST Council met to change how the tax system is administered.
It removed GST officers’ power to arrest people under GST and raised the amount involved before prosecution can begin from ₹1 crore to ₹5 crore.
Judges will decide whether punishment should be a fine, prison, or both.
The general penalty was also lowered when no specific penalty applies.
People must still pay the tax they owe, interest, and proportionate penalties for late or incorrect filings.
The Council approved ways to make many refunds faster and some business tax credits easier to claim.
It also approved simpler processes for some small businesses and sellers using online marketplaces.
GST rates did not change.
The Council said the process reforms are due to begin on April 1, 2027, and officials will study how to protect buyers when suppliers fail to pay GST.
At its 57th meeting, the GST Council removed GST officers’ arrest powers and raised the prosecution threshold from ₹1 crore to ₹5 crore.
The minimum punishment was removed, judicial discretion will determine punishment, and the general penalty fell from ₹25,000 to ₹10,000 where no specific penalty applies.
Refund claims will be acknowledged within 10 days or treated as acknowledged; 90% of eligible claims will be processed after risk assessment, with orders within three working days.
The Council approved broader input tax credits and refunds, automated processes, and simpler compliance measures for some small businesses and e-commerce sellers.
GST rates were unchanged; most process reforms are scheduled to take effect on April 1, 2027, while a committee will examine protections for buyers whose suppliers default.
- Who
- The GST Council, chaired by Union Finance Minister Nirmala Sitharaman.
- What
- It approved enforcement and compliance reforms, including removing GST officers’ arrest powers and raising the prosecution threshold.
- When
- At its 57th meeting on Thursday; most process reforms are scheduled to take effect on April 1, 2027.
- Where
- New Delhi.
- Why
- The stated aims include simplifying compliance, reducing litigation, speeding refunds, and shifting enforcement toward data-led detection and proportionate action.
Government’s case for reform
Taxpayer protections still under review
Enforcement approach
Government’s case for reform
The government said invoice-level matching and data analytics allow authorities to identify suspicious transactions more precisely, supporting less reliance on arrest powers and broad intervention.
Taxpayer protections still under review
Businesses have raised concerns about stringent tax practices and possible overreach; the articles do not report a specific opposing statement to the Council’s changes.
Input tax credit when suppliers default
Government’s case for reform
The Council approved expanded input tax credit and refund eligibility for several business expenses and situations.
Taxpayer protections still under review
It deferred a final decision on protections for genuine buyers whose suppliers fail to pay GST; a committee will study the issue and report within three months.
- Meeting
- 57th GST Council meeting
- Prosecution threshold
- Raised from ₹1 crore to ₹5 crore
- General penalty
- Reduced from ₹25,000 to ₹10,000 where no specific penalty applies
- Refund acknowledgement
- Deadline reduced from 15 days to 10 days; claims are treated as acknowledged if no acknowledgement or deficiency memo is issued
- Eligible refunds
- 90% to be sanctioned after risk assessment, with orders within three working days of acknowledgement
- Input tax credit protections
- A Committee of Officers will examine safeguards for genuine buyers whose suppliers default and report within three months
- GST rates
- No rate changes were approved at the meeting
- Implementation
- Process reforms are scheduled to take effect on April 1, 2027
Sources
GST Council removes arrest power, raises prosecution threshold to ₹5 crore: What changes for taxpayers
GST Council Scraps Tax Officers' Arrest Power, Prosecution Threshold Raised To Rs 5 Crore, Rates Unchanged
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