New Delhi — The Goods and Services Tax (GST) Council will take up a proposal to remove arrest powers under the indirect tax regime at its meeting on October 7, The Indian Express reported on Sunday, citing two people aware of the development.
More than nine years after GST's rollout in July 2017, the proposal marks what the report describes as a major push to ease business compliance and address industry concerns about overreach by tax authorities — concerns industry leaders have termed an overreach after several recent arrests of high-ranking functionaries.
Months of consultations
The Centre and the states are learnt to have held several rounds of meetings over the last eight to nine months, including involvement at the top levels of the Union government, to reach a broad consensus on removing the arrest provisions, which were seen as a major impediment for traders and businesses.
"The consultations had been going on since the last eight-nine months. The feedback from businesses about the arrests has been taken into account to move ahead with this discussion," a source told The Indian Express. The Council will take up the matter and the final decision will be taken after that, following which legislative changes would be introduced to remove the arrest provisions under GST laws.
For intentional fraud and deceit under GST, authorities would proceed with prosecution — and arrests, where needed, would be made through the country's criminal code, the Bharatiya Nyaya Sanhita, a source said.
Broader reform agenda
The October 7 meeting is expected to focus on process reforms more broadly. Reports ahead of the meeting said the Council may consider cutting the general penalty for taxpayers from Rs 25,000 to Rs 10,000, easing refunds and registration norms, and reducing disputes over input tax credit. Finance Minister Nirmala Sitharaman has said the meeting will focus "only on process reforms." The agenda follows the rate rationalisation implemented in September 2025, when the Council collapsed four GST slabs into a two-tier structure.
Sources: The Indian Express — Arrest powers under GST regime likely to be removed, ABP Live — GST Council To Consider Lower Penalties, Easier Refunds, And Simplified Registration On Oct 7
More than nine years after GST's rollout in July 2017, the proposal marks what the report describes as a major push to ease business compliance and address industry concerns about overreach by tax authorities — concerns industry leaders have termed an overreach after several recent arrests of high-ranking functionaries.
Months of consultations
The Centre and the states are learnt to have held several rounds of meetings over the last eight to nine months, including involvement at the top levels of the Union government, to reach a broad consensus on removing the arrest provisions, which were seen as a major impediment for traders and businesses.
"The consultations had been going on since the last eight-nine months. The feedback from businesses about the arrests has been taken into account to move ahead with this discussion," a source told The Indian Express. The Council will take up the matter and the final decision will be taken after that, following which legislative changes would be introduced to remove the arrest provisions under GST laws.
For intentional fraud and deceit under GST, authorities would proceed with prosecution — and arrests, where needed, would be made through the country's criminal code, the Bharatiya Nyaya Sanhita, a source said.
Broader reform agenda
The October 7 meeting is expected to focus on process reforms more broadly. Reports ahead of the meeting said the Council may consider cutting the general penalty for taxpayers from Rs 25,000 to Rs 10,000, easing refunds and registration norms, and reducing disputes over input tax credit. Finance Minister Nirmala Sitharaman has said the meeting will focus "only on process reforms." The agenda follows the rate rationalisation implemented in September 2025, when the Council collapsed four GST slabs into a two-tier structure.
Sources: The Indian Express — Arrest powers under GST regime likely to be removed, ABP Live — GST Council To Consider Lower Penalties, Easier Refunds, And Simplified Registration On Oct 7
