The Goods and Services Tax Council, at its 57th meeting in New Delhi on October 8, decided to scrap the arrest powers of GST officers and raised the prosecution threshold for GST offences to ₹5 crore, according to reports. The decisions are aimed at streamlining enforcement under the indirect tax regime and giving relief to businesses.
According to reports, the removal of arrest powers marks a significant shift in how tax authorities can act against suspected offenders. The power to arrest has long been among the most contentious provisions in GST enforcement, with trade and industry bodies arguing that it was being used in ways that created fear and uncertainty for otherwise compliant businesses.
The Council also raised the monetary threshold for launching prosecution in GST offences to ₹5 crore. According to reports, the higher bar means that smaller cases will no longer attract criminal proceedings, reserving prosecution for more serious violations and reducing the compliance burden on small and medium enterprises.
Business groups have for years sought a more measured enforcement approach, arguing that the threat of arrest and prosecution over interpretational or procedural disputes discouraged investment and entrepreneurship. According to reports, the Council’s latest decisions respond to those concerns while retaining the framework needed to act against deliberate evasion.
The GST Council, which brings together the Union and state finance ministers, is the apex decision-making body for the tax. Its meetings routinely take up rate rationalisation, compliance measures and enforcement questions, and its recommendations shape how the tax is administered across the country.
According to reports, officials said the changes are intended to strike a balance between protecting revenue and ensuring ease of doing business. With arrest powers removed and the prosecution threshold raised sharply, enforcement is expected to rely more on assessments, penalties and recovery proceedings, while criminal action is reserved for the largest and most serious cases of tax offences.
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