Union Finance Minister Nirmala Sitharaman on Thursday chaired the 57th GST Council meeting in New Delhi, where the Council approved a series of changes to GST enforcement, including the removal of arrest
powers for GST officers.
The Council also decided to raise the threshold for prosecution from Rs 1 crore to Rs 5 crore while reducing the general penalty from Rs 25,000 to Rs 10,000.
Under the earlier GST framework, Section 69 of the CGST Act allowed the Commissioner to authorise a central tax officer to arrest a person suspected of committing certain specified offences.
The latest decision removes this arrest power from GST officers. The change is aimed at shifting enforcement towards tax recovery and other legal processes rather than allowing tax officials to directly make arrests.
The Council also increased the prosecution threshold to Rs 5 crore from Rs 1 crore. This means criminal prosecution will be reserved for cases involving a higher level of alleged tax evasion.
The general penalty has also been reduced from Rs 25,000 to Rs 10,000, according to the details released after the meeting.
“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,” said Sitharaman.
What Was The Earlier GST Arrest Power?
When GST came into force in 2017, Section 69 empowered the Commissioner to authorise arrests for certain serious offences under Section 132 of the CGST Act. These included cases involving fraudulent invoicing, collecting GST but failing to deposit it with the government and wrongful input tax credit claims.
The arrest provision was originally introduced as an enforcement tool against serious tax evasion. The GST Council had debated the scope of the provision even before GST was rolled out, with states discussing thresholds and safeguards around its use.
The latest decision therefore marks a significant change in the enforcement framework, although the exact legal changes will depend on amendments to the GST law.
