India’s GST Council is set to review proposed changes to criminal provisions, including raising the prosecution threshold to ₹10 crore and reducing maximum jail terms, in a move towards more proportionate enforcement and judicial discretion.
India’s GST Council is expected to take up a significant rethink of the tax law’s criminal provisions on October 7, with officials saying the current proposal would lift the prosecution threshold, reduce jail terms for some offences and give judges more room to decide whether a case warrants imprisonment, a fine or both.
According to officials briefed on the Law Committee’s discussions, the most notable change under consideration is an increase in the monetary threshold for prosecution to ₹10 crore from ₹5 crore, a level that has remained unchanged since the Goods and Services Tax system was introduced in 2017. The committee has also suggested cutting the maximum jail term for certain offences linked to tax evasion in the ₹5 crore-₹10 crore range to two years from three.
The move would mark a broader shift towards proportionate enforcement, with the committee arguing that criminal penalties should be reviewed periodically as the economy expands. It would also address a long-standing criticism of the current framework: that courts have limited scope to tailor punishment to the seriousness of the offence. Under the proposed changes, judges would be able to choose imprisonment, a fine, or both, depending on the facts of the case.
The more divisive question is whether GST officials should keep the power to arrest. The Law Committee did not reach agreement on removing that power altogether, with one side arguing that tighter return-filing safeguards would reduce mismatches and input tax credit fraud, making arrests less necessary. That camp said prosecution powers would still remain available for serious fraud cases. The opposing view was that arrest remains an important deterrent and that weakening enforcement could hurt compliance, though supporters of retention said safeguards should be strengthened to prevent misuse.
The debate comes as the GST Council is also examining wider process reforms aimed at simplifying compliance, including changes to penalties, refunds, registration and input tax credit claims. If the Council backs the criminal-law changes, the proposals would still need legislative amendment, likely during Parliament’s Winter Session, before they can take effect.
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