India’s GST Council has approved a major enforcement reset, removing tax officers’ power to arrest alleged offenders, raising the prosecution threshold fivefold and cutting the general penalty to Rs 10,000.
India’s GST Council has moved to sharply curb the enforcement powers of tax officers, approving a sweeping change that removes their authority to arrest alleged offenders and lifts the prosecution threshold to Rs 5 crore, a major shift in the way the levy will be enforced.
Union Finance Minister Nirmala Sitharaman announced the decision after chairing the 57th GST Council meeting in New Delhi on Thursday. The Council also cut the general penalty to Rs 10,000 from Rs 25,000, signalling a more restrained approach to cases that fall below the higher prosecution bar.
Under the existing framework, Section 69 of the CGST Act had allowed the commissioner to authorise a central tax officer to arrest a person suspected of serious GST-related offences, including fraudulent invoicing, wrongful input tax credit claims and the collection of tax without remittance to the government. According to details released after the meeting, that arrest power is now being removed, while criminal prosecution will be reserved for larger cases of alleged evasion.
Sitharaman said the Council had recommended “removing arrest powers under GST” and raising the prosecution threshold from Rs 1 crore to Rs 5 crore. She added that cases below Rs 5 crore would not face prosecution and that the general penalty would be reduced to Rs 10,000.
The Tribune and Daily Excelsior reported that the move also eliminates the minimum punishment, leaving sentencing to judicial discretion. Both outlets said the reform is intended to shift the system toward tax recovery and legal process rather than direct arrests by officers, although the changes will take effect only after the necessary amendments to GST law.
The decision marks one of the most significant enforcement resets since GST was introduced in 2017. Officials had long debated the scope of arrest powers under Section 69, and the latest move appears designed to narrow criminal action to the most serious cases while easing pressure on businesses caught up in lower-value disputes.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
