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GST Council meeting scraps arrest powers, raises prosecution threshold to ₹5 crore

The 57th GST Council meeting, chaired by Finance Minister Nirmala Sitharaman at Bharat Mandapam in New Delhi on Thursday, 8 October 2026, recommended removing the power of GST officers to arrest people under the GST law and raising the threshold for prosecution from ₹1 crore to ₹5 crore. Tax rates were left unchanged.

GST Council meeting: Finance Minister Nirmala Sitharaman and senior officials at the media briefing after the 57th meeting at Bharat Mandapam, New Delhi
Nirmala Sitharaman with senior officials at the media briefing after the 57th GST Council meeting, Bharat Mandapam, New Delhi, 8 October 2026. Photo: PIB (official handout)
Key facts

  • Arrest powers under GST: removed
  • Prosecution threshold: ₹1 crore → ₹5 crore
  • General penalty: ₹25,000 → ₹10,000
  • Minimum punishment: dropped, left to the courts
  • GST rates: unchanged
  • Start date: 1 April 2027, Sitharaman said

What the GST Council meeting changes for taxpayers

Officers will still investigate suspected evasion, recover unpaid tax, impose penalties and launch prosecution above the higher limit, but they will no longer be able to arrest anyone under the GST law. The minimum punishment has also been dropped, leaving a fine, imprisonment or both to the discretion of the courts, India Today reported. The general penalty, which applies where no specific penalty is set, falls from ₹25,000 to ₹10,000.

Faster refunds and easier registration

The Council also recommended quicker refunds. The time limit for acknowledging a refund claim comes down from 15 days to 10, and 90% of eligible claims will be sanctioned on a risk-based assessment, CNBC-TV18 reported. Other steps listed in the official release include simpler registration for small sellers on e-commerce platforms, wider eligibility for input tax credit, common standards for notices, and an in-principle optional scheme for small consumer-facing businesses with turnover up to ₹5 crore.

Finance Minister Nirmala Sitharaman speaking at the media briefing after the 57th GST Council meeting in New Delhi on 8 October 2026
Finance Minister Nirmala Sitharaman briefs reporters on the Council’s recommendations. Photo: PIB (official handout)

Sitharaman said the reforms would be implemented from 1 April 2027. The Council also decided that rate matters will be taken up once a year at a meeting dedicated only to rates, The Economic Times reported.

Why it matters

For most businesses, GST disputes will now be handled through recovery, interest and penalties rather than the threat of arrest. With rates unchanged, this meeting was entirely about how the tax is enforced and administered, from registration to refunds.

Source: PIB, The Hindu, The Economic Times, India Today, CNBC-TV18

Photo: PIB (official handout)

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