In Major Reform, GST Council Scraps Tax Officers' Arrest Powers

The GST Council, chaired by Finance Minister Nirmala Sitharaman, on Thursday approved scrapping the arrest powers of GST officers and raised the threshold to launch prosecution to Rs 5 crore from Rs 1 crore.

The minimum punishment stands removed, and the punishment - whether fine, imprisonment, or both - is left to judicial discretion in every case, as per the council decision. The general penalty, which applies where no specific penalty is provided, comes down from Rs 25,000 to Rs 10,000, the Ministry said.

A taxpayer who files late, makes an error or delays payment will face recovery, interest and a proportionate penalty, but nothing beyond that.

Businesses across India had complained about stringent tax practices and sought better ease of doing business.

Addressing reporters after the meeting, Minister Sitharaman said the Council focused on process-related reforms aimed at improving ease of doing business and reducing compliance burdens rather than making changes to GST rates.