GST Council removes officers' arrest powers, raises prosecution threshold to Rs 5 crore

The GST Council on Thursday, 8 October 2026, approved a package of process reforms that removes the power of Goods and Services Tax officers to arrest taxpayers and raises the threshold for prosecution from Rs 1 crore to Rs 5 crore, IANS, The Economic Times and NDTV Profit reported. The Council, chaired by Union Finance Minister Nirmala Sitharaman, left GST rates unchanged at its 57th meeting in New Delhi.

What the Council decided

According to The Economic Times, the Council also removed the minimum punishment for offences, leaving the choice of fine, imprisonment or both to the courts, and cut the general penalty from Rs 25,000 to Rs 10,000. It said that late filing, errors and delayed payments will attract tax recovery, interest and proportionate penalties, without additional punitive action.

On refunds, the reports agree that the time for acknowledging a refund application will fall from 15 days to 10 days, and that 90% of eligible claims will be sanctioned within three working days. The Economic Times said orders are now issued within seven days and that refunds of excess balances in electronic cash ledgers will become fully automatic.

Other measures reported by The Economic Times include:

• an optional annual return scheme, with quarterly payment of tax, for businesses with turnover up to Rs 5 crore that supply only to consumers (approved in principle);
• a minimum of Rs 10,000 for issuing a show-cause notice;
• input tax credit on health and life insurance bought by businesses for employees, telecom towers, certain pipelines, free samples and specified expired stock;
• physical checks of goods in transit only on specific intelligence and with prior authorisation from an officer of at least Joint Commissioner rank, and only by the originating and destination states;
• a committee of officers to examine protecting genuine buyers from input tax credit reversals caused by supplier defaults, to report within three months for the next meeting.

NDTV Profit reported that Ms Sitharaman also said faceless assessment is being brought in for taxpayers under the Central GST jurisdiction, with a framework to be put out for public consultation by the end of the year.

On rates

“No rate changes have been made. The rate structure is settled,” Ms Sitharaman told reporters after the meeting, IANS reported. The Economic Times reported that GST rate matters will in future be taken up once a year at a meeting devoted only to rates. It cited the Finance Ministry as saying that taxable supplies have risen from Rs 40.19 lakh crore to Rs 50.58 lakh crore a month since the two-rate structure was introduced, and that GST revenue grew 11% in 2026-27 compared with the previous year.

What happens next

Ms Sitharaman said the reforms will be implemented from 1 April 2027, the start of the next financial year, according to The Economic Times and NDTV Profit. Refund eligibility for input services is to apply to credit availed on or after 1 November 2026, and for plant and machinery to credit availed on or after 1 April 2027, The Economic Times reported. The Council’s decisions are recommendations; changes to the GST laws themselves need amendments by Parliament and the state legislatures.

We could not retrieve the GST Council’s own release or a Press Information Bureau note at the time of writing, so details here rest on the three reports cited. Responses from state governments and opposition parties had not been published by then.