GST Council removes arrest powers, raises prosecution limit to Rs 5 cr

The GST Council on Thursday decided to remove the power of arrest under the Goods and Services Tax (GST) regime and raised the prosecution threshold to Rs 5 crore from the existing Rs 1 crore, Union Finance Minister Nirmala Sitharaman said.The decisions were taken at the 57th meeting of the GST Council chaired by Sitharaman, as part of a major overhaul of GST enforcement and compliance rules.
Currently, GST officers can arrest individuals, after prior authorisation from a Commissioner-level officer, in cases involving major offences where tax evasion, fraudulent input tax credit (ITC) or wrongful refunds exceed Rs 1 crore.Under the changes approved by the Council, this power of arrest will be removed, while the threshold for prosecution will be raised five-fold to Rs 5 crore.

Delhi: After 57th GST Council meeting, Union Finance Minister Nirmala Sitharaman says, "And with the authorization by at least a joint commissioner level officer. So any random GST officer cannot go, stop a vehicle, and say, 'Come on, show it to me'. This prevents arbitrary checks by GST enforcement wings that affect the movement of goods from one state to another. This would significantly improve ease of movement of goods. Also, the Council recommended removing arrest powers under GST. Council recommended raising the prosecution threshold from 1 crore to 5 crores. So prosecution is not going to happen for anything below 1 crore, till now that's been the threshold, now it's taken up to 5 crores. Anything below 5 crores, no prosecution..."

— IANS (@ians_india) October 8, 2026

The Council also removed the minimum punishment prescribed for GST offences. The decision on whether a case warrants a fine, imprisonment or both will now be left to judicial discretion.The general penalty, applicable in cases where no specific penalty is prescribed, has also been reduced to Rs 10,000 from Rs 25,000.The Finance Ministry said a taxpayer who files late, makes a mistake or falls behind on payment will face recovery, interest and a proportionate penalty, with no further action beyond that.
No GST rate changes
The Council decided that rate-related matters will be taken up once a year at a meeting set aside exclusively for the purpose.The Finance Ministry said no rate changes were made at the 57th GST Council meeting and the rate structure is now settled, according to agency reports.

(Business Correspondent)