Skip to main content
GST Arrest Reforms: ₹5 Crore Threshold Proposed
Back to Court News
N/Atax

GST Arrest Reforms: ₹5 Crore Threshold Proposed

October 11, 2026

GST Council proposes scrapping arrest powers and raising prosecution threshold to ₹5 crore, with reduced imprisonment. The reforms reflect a de-criminalisation push in indirect tax enforcement.

GST Arrest Reforms: Council Moves to De-Criminalise Minor Defaults

In a significant move toward de-criminalisation, the GST Council has proposed eliminating arrest powers for tax officials and raising the threshold for prosecution under Section 132 of the CGST Act from ₹1 crore to ₹5 crore. The reform, detailed in official FAQs, also reduces maximum imprisonment from five to three years for specified offences.

The Council cited the need to align enforcement with economic realities and reduce harassment of small businesses. The reforms target non-fraudulent lapses, ensuring that criminal remedies are reserved for large-scale, deliberate tax evasion. Changes also include substituting the term 'penalty' with 'voluntary payment charge' in cases of unintentional defaults.

While pending implementation, these proposals will influence investigative conduct and courtroom arguments. Practitioners should highlight these policy shifts when contesting disproportionate enforcement actions and argue for proportionality in sentencing recommendations.

Citations

  • Section 132, CGST Act
Practice Areas:tax

Related Articles

View All →
Tax Classification Based on Form at Sale: Supreme CourtFeatured
Supreme Court of Indiataxcorporate

Tax Classification Based on Form at Sale: Supreme Court

The Supreme Court held that tax classification of goods must be determined by their physical form at the time of sale, not by the end-use or intended application by consumers.

Oct 14, 2026Read more →
SC: GST Fraud Under Section 74 Not Presumed From DiscrepanciesFeatured
Supreme Court of Indiatax

SC: GST Fraud Under Section 74 Not Presumed From Discrepancies

The Supreme Court held that fraud under GST Section 74 cannot be presumed solely from tax discrepancies or ITC mismatches, requiring independent proof of intent to evade tax.

Oct 14, 2026Read more →
Tax Classification Based on Form at Time of Sale, Not End Use: SCFeatured
Supreme Court of Indiataxcorporate

Tax Classification Based on Form at Time of Sale, Not End Use: SC

The Supreme Court held that tax classification of goods must be determined by their physical form at the time of sale, not by the buyer's ultimate use, clarifying long-standing confusion in tax jurisprudence.

Oct 12, 2026Read more →