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GST arrest powers may shift from tax officers to courts

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GST arrest powers may shift from tax officers to courts
North Block on Raisina Hill, New Delhi, which houses the Union finance ministry. Photograph by Shashwat Nagpal, CC BY-SA 4.0, via Wikimedia Commons.

GST arrest powers would no longer sit with tax officers if a proposal before the GST Council goes through, The Tribune reported on Sunday, 4 October 2026. People familiar with the plan said any arrest would instead need a court order, and that the Council is likely to take up the idea at its meeting on 7 October.

The same package would raise the threshold for launching criminal proceedings from ₹1 crore to ₹5 crore. It would also narrow prosecution so that it does not cover routine disputes over classification, valuation or input tax credit.

What losing GST arrest powers would still leave in place

Section 69 of the Central GST Act currently lets the Commissioner, when statutory conditions are met, authorise an officer to arrest a person. Sources told The Tribune that the power has come to be seen by businesses as a tool of harassment, and that people arrested by GST officers have in most cases later got bail. Actual imprisonment can follow only after prosecution and conviction.

The proposal would not stop the government recovering tax, interest or penalty. Serious cases of deliberate evasion or fraud could still be prosecuted through the courts. Sources said 24 offences listed for prosecution would be softened, nine removed entirely and 11 kept as they are. The minimum sentence would go, a fine would be available in every case, and the maximum sentence in the middle band would fall from three years to two.

The Tribune linked the idea to the Next-Generation GST agenda that followed the September 2025 rate change, built around a 5 per cent merit rate, an 18 per cent standard rate and a 40 per cent rate for selected luxury and demerit goods. AMRG Global managing partner Rajat Mohan called the shift a move from arrest-led deterrence to data-led detection.

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