GST Council scraps arrest powers, raises prosecution threshold to Rs 5 crore at 57th meeting

The 57th meeting of the GST Council was held in New Delhi under the chairmanship of Union Finance Minister Nirmala Sitharaman. Several important decisions affecting traders and industry were taken. The council approved a number of changes aimed at making compliance with the GST law easier and simplifying legal procedures.

The biggest decision of the meeting was to scrap the power of arrest that officials had under the GST law. This is expected to bring significant relief to taxpayers and businesses.

The threshold for filing prosecution directly in cases of violation of GST rules has been raised from Rs 1 crore to Rs 5 crore. The provision for a minimum sentence for offences has also been removed. The nature of the penalty or sentence will now depend on the court's decision.

To give relief to small traders, the council has also reduced the amount of the general penalty. For violations for which no separate penalty was prescribed, a penalty of up to Rs 25,000 was earlier imposed. This limit has now been brought down to Rs 10,000.

Another important decision for businesses concerns GST refunds. The period for sanctioning a refund has been cut from 15 days to 10 days. Money of businesses that remains stuck should, as a result, reach them comparatively sooner.

Tax will be recovered from taxpayers who do not file returns on time or who delay paying tax. In such cases, interest and a proportionate penalty can be imposed under the applicable rules. It was clarified, however, that no harsh or harassing action will be taken merely because of a delay in paying tax.

No change was made to GST tax rates at this meeting. It was decided that issues related to rates will be reviewed once a year. Ms Sitharaman made it clear that the government's emphasis is less on tax rates than on making the tax system simpler, more transparent and faceless.