New Delhi: The 57th GST Council meeting on Thursday approved a series of changes aimed at simplifying GST compliance and reducing the scope for criminal action against taxpayers. Among the biggest decisions was the removal of the arrest powers of GST officers and a five-fold increase in the threshold for initiating prosecution, from ₹1 crore to ₹5 crore.
Finance Minister Nirmala Sitharaman announced the decisions after the meeting, which was held in New Delhi. The Council also decided to retain the existing GST rate structure, meaning there was no fresh change in GST rates at this meeting.
Under the proposed changes, GST officers will no longer have the power to arrest taxpayers in cases of tax evasion. The move is part of a broader effort to shift GST enforcement towards tax recovery and compliance rather than criminal proceedings. Legal action in serious cases will continue through the appropriate law-enforcement and judicial process.
The Council also approved raising the prosecution threshold from ₹1 crore to ₹5 crore. This means cases involving tax evasion, wrongful input tax credit or similar offences below the new threshold would generally not trigger prosecution under the relevant GST provisions. The changes are intended to reduce litigation and provide greater certainty to businesses.
The Council also backed wider decriminalisation of GST offences. Several provisions are proposed to be removed from the criminal framework, while penalties for other violations are being rationalised. The general penalty has also been reduced from ₹25,000 to ₹10,000, according to the Finance Minister’s announcement.
Another major area of reform is GST registration. Small businesses selling through e-commerce platforms are expected to get a simpler registration mechanism. The proposed system would allow eligible sellers to use an e-commerce platform’s warehouse as their registered place of business in states where they do not maintain their own premises.
The Council also approved measures aimed at making GST refunds faster, with greater use of automated processes. The reforms are expected to particularly benefit exporters and businesses that frequently face delays in receiving refunds.
The meeting also discussed measures to simplify compliance and reduce unnecessary physical interaction between taxpayers and officials. Proposals include easier registration forms, streamlined procedures and a more technology-driven approach to GST administration.
The Council’s decisions come as the GST regime completes nine years since its launch in July 2017. The latest reforms indicate a shift towards what the government describes as a more trust-based taxation system, while retaining enforcement mechanisms for serious cases of tax evasion.
The recommendations will now require the necessary legislative and regulatory changes before they come into effect.
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