New Delhi: The high-powered GST Council Thursday approved removing the arrest power of tax officials and raising the threshold for prosecution fivefold to Rs 5 crore, while introducing faster and largely automated refunds for taxpayers.
Announcing the decisions taken at the 57th meeting of the GST Council, Finance Minister Nirmala Sitharaman said the Council also decided to reduce the general penalty from Rs 25,000 to Rs 10,000. The changes approved by the GST Council will be implemented from April 1, 2027.
The GST Council also cleared a proposal under which a taxpayer who files a return late, makes a mistake or falls behind on payment will face recovery, interest and a proportionate penalty, and nothing beyond that. Another key recommendation was to extend refunds under the inverted duty structure to input services.
The change will be applicable to credit availed on or after November 1, 2026, Sitharaman said. She also said the government intends to introduce faceless tax assessment for Central Goods and Services Tax (CGST) taxpayers registered in multiple states. Sitharaman said, “The power of arrest will be removed from GST and the threshold for prosecution will be raised from Rs 1 crore to Rs 5 crore.” No notices will be issued in cases involving amounts below the monetary threshold of Rs 10,000.
The GST Council, comprising Union and state finance ministers, also recommended removing the minimum punishment. The punishment, whether a fine, imprisonment or both, will be left to judicial discretion in every case. Sitharaman further said, “The general penalty, applicable where no specific penalty is provided, would also be reduced from Rs 25,000 to Rs 10,000.” She also said no GST rates had been changed at the meeting.
