The GST Council proposes raising the threshold for show-cause notices to ₹10,000 and replacing penalties with voluntary charges in minor defaults. These reforms aim to reduce litigation burden and promote compliance.
Proposed GST Litigation Reforms: Higher SCN Threshold
The GST Council has proposed a ₹10,000 threshold for issuing show-cause notices (SCNs) in tax disputes, under newly released PIB FAQs. This move is part of broader litigation reforms designed to reduce administrative burden and encourage voluntary compliance for minor discrepancies.
Under the proposal, disputes involving tax arrears below ₹10,000 will not attract formal scrutiny or penalties. Instead, assessees may opt for voluntary payment of tax with nominal charges. The tax heads—CGST, SGST, and IGST—are to be aggregated for determining the threshold. The reform seeks to discourage petty litigation and redirect investigative resources toward high-value evasion cases.
While not yet law, the proposal signals a shift in policy philosophy—from punitive enforcement to incentive-based compliance. Practitioners should anticipate fewer SCNs in small-value cases and prepare for revised audit strategies focused on material non-compliance.
