GST Council Recommends Removing Arrest Powers Under GST

The GST Council arrest powers provision could undergo a major change after the 57th GST Council meeting recommended removing arrest provisions under the Goods and Services Tax framework. Union Finance Minister Nirmala Sitharaman announced the recommendations in New Delhi on Wednesday.

The Council also recommended raising the monetary threshold for prosecution from ₹1 crore to ₹5 crore and reducing the maximum general penalty under the CGST Act from ₹25,000 to ₹10,000.

GST Council Recommends Removal of Arrest Provisions

Addressing the outcome of the 57th GST Council meeting, Nirmala Sitharaman said the Council had recommended removing arrest powers under GST.

The move forms part of a broader set of reforms aimed at simplifying GST administration, reducing litigation and easing compliance requirements for taxpayers.

#WATCH | Delhi | 57th GST Council meeting | Union Finance Minister Nirmala Sitharaman says, "The Council recommended removing arrest powers under GST. Council recommended raising the prosecution threshold from Rs 1 crore to Rs 5 crore. Anything below Rs 5 crore no prosecution and reducing the general penalty from Rs 25,000 to Rs 10,000"

— ANI (@ANI) October 8, 2026

Prosecution Threshold Raised to ₹5 Crore

The Council recommended increasing the monetary threshold for prosecution from ₹1 crore to ₹5 crore.

This means offences involving amounts below ₹5 crore would generally fall outside the prosecution threshold under the proposed changes.

The Council also recommended rationalising punishment provisions for different GST offences.

General Penalty Cut From ₹25,000 to ₹10,000

Another significant recommendation concerns the general penalty under Section 125 of the CGST Act.

The maximum general penalty is proposed to be reduced from ₹25,000 to ₹10,000.

This forms part of the Council’s wider effort to reduce compliance burden and make the GST framework less punitive for smaller violations.

No GST Notices Below ₹10,000 Tax Amount

The Council also recommended introducing a minimum threshold of ₹10,000 for the issuance of show-cause notices.

Under the proposed change, notices would not be issued where the tax amount involved is below ₹10,000.

The Council further recommended reduced penalties in certain non-fraud cases where taxpayers discharge the tax, interest and penalty within the specified period.

57th GST Council Meeting Focuses on Process Reforms

The 57th GST Council meeting was chaired by Union Finance and Corporate Affairs Minister Nirmala Sitharaman in New Delhi.

Apart from the recommendations concerning GST Council arrest powers, prosecution and penalties, the meeting also proposed reforms relating to registration, refunds, input tax credit, appeals and movement of goods between states.

The recommendations will require appropriate legislative and procedural changes before they take effect.