GST COUNCIL DISARMS TAX OFFICIALS, RAISES PROSECUTION BAR TO ₹5 CRORE

October 8, 2026

The Goods and Services Tax Council has approved a major easing of GST enforcement, scrapping the power of tax officers to arrest taxpayers and raising the threshold for prosecution from ₹1 crore to ₹5 crore.

The decisions were taken at the Council’s 57th meeting on Thursday as the government sought to simplify GST compliance and reduce procedural pressure on businesses. The existing GST rate structure was left unchanged.

Under the new framework, prosecution for GST offences will be initiated only when the amount involved crosses ₹5 crore, significantly increasing the earlier threshold of ₹1 crore. The Council has also removed the minimum punishment requirement, leaving courts to decide whether a case warrants a fine, imprisonment or both.

The Council further reduced the general penalty applicable where no specific penalty has been prescribed from ₹25,000 to ₹10,000. It also recommended common standards for tax notices and proceedings, including a ₹10,000 monetary threshold below which notices will not be issued. Pending notices below that amount will also be withdrawn.

The changes are part of a broader effort to make GST administration less punitive and more focused on compliance and tax recovery. The Council also approved measures aimed at making GST registration easier for small sellers operating through e-commerce platforms.

On input tax credit disputes, the Council decided to constitute a committee of officers to examine how genuine buyers with valid invoices, who have received their goods and fully paid suppliers, can be protected from difficulties arising from the actions of suppliers. The committee is expected to complete its study within three months.

The Council said GST rate changes will now be considered once a year, while the latest meeting concentrated on improving the day-to-day functioning of the tax system rather than altering the existing rate structure.