GST The council is likely to consider this week a proposal to withdraw arrest powers from tax officials and make court approval mandatory for any arrest. People familiar with the proposal gave this information. The GST Council, which takes decisions on GST, may also consider a package of prosecution-related reforms in an important meeting to be held on October 7. This includes increasing the threshold for initiating criminal action for offenses from Rs 1 crore to Rs 5 crore.
The scope of prosecution provisions can also be limited
People familiar with the matter said the scope of prosecution provisions may also be limited, so that criminal action does not take place on common disputes involving classification, valuation or input tax credit (ITC) of goods or services. In such cases, traders and tax authorities may interpret the same transaction differently. These proposals are part of the government’s next generation GST reforms.
The aim is to make GST registration easier and give faster refunds.
Following the revision of GST rates in September 2025, the next phase of reforms is expected to focus on simplifying administration, reducing compliance costs and making enforcement more proportionate. According to people familiar with the matter, the comprehensive package under consideration includes simplifying GST registration, faster refunds, simplifying the process of input tax credit and changes in rules related to show cause notices and penalties.
Judicial approval will be necessary for any arrest
At the heart of the proposal related to enforcement is Section 69 of the Central GST Act. Under this, if the legal conditions laid down are fulfilled and there is sufficient cause for a person to have committed a particular offence, the Commissioner can authorize an officer to arrest him. The proposed changes involve withdrawing this power from the tax authorities and making judicial approval necessary for any arrest. These changes will not remove the government’s right to collect taxes or impose financial penalties.
Crime can be settled by paying prescribed tax, interest and fine
Under ‘compounding’ the crime can be settled by paying the prescribed tax, interest and penalty. Tax recovery and other legal action will continue against those who pay less tax or wrongly claim input tax credit. In cases of serious and willful tax evasion or fraud, prosecution through the courts may continue. The move will also be in line with the government’s broader effort to decriminalize economic and regulatory crimes.
PTI Inputs
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