New Delhi: GST Council, comprising Centre and state Finance Ministers, has rationalised the maximum term of imprisonment for GST offences to up to 5 years, a fine, or both, and changed the punishment from “imprisonment and fine” to “imprisonment or a fine or both”.
The maximum term of imprisonment has been rationalised in cases where the amount of tax evasion exceeds Rs 10 crore to up to five years, or a fine, or both.
Where GST evasion exceeds Rs 5 crore but not Rs 10 crore, imprisonment up to two years, or a fine, or both, has been approved at the 57th GST Council meeting.
In an FAQ, the Central Board of Indirect Taxes and Customs (CBIC) said that in case someone is convicted, imprisonment will not be compulsory.
“The punishment is proposed to be changed from ‘imprisonment and fine’ to ‘imprisonment or fine or both’, so that the court may have discretion in awarding punishment,” the CBIC said.
Requirement of a minimum imprisonment of 6 months under section 132 (3) has been removed to confer discretion on the court.
The proposals approved by the Council on Thursday will be implemented from April 1, 2027.
In a major decriminalisation move, the GST Council has decided to remove the arrest provisions under GST, and no person will be arrested by a GST officer for an offence under the law.
However, prosecution may still be launched before the competent court on a complaint filed by the tax authorities, where the amount involved exceeds Rs 5 crore.
The Council has raised the threshold for launching prosecution in GST evasion cases to Rs 5 crore from Rs 1 crore, currently.