GST Council Scraps Tax Officers’ Arrest Powers, Raises Prosecution Threshold to Rs 5 Crore

FM Sitharaman says the 57th GST Council meeting prioritised ease of doing business over rate changes

October 8, 2026

The GST Council has scrapped arrest powers of tax officers and raised the prosecution threshold to Rs 5 crore

GST on certain delivery services falls from 18% to 5% in relief for riders and platforms

The Goods and Services Tax (GST) Council on Thursday approved a package of taxpayer-friendly reforms, including the removal of arrest powers from tax officers and a rise in the threshold for criminal prosecution from Rs 1 crore to Rs 5 crore.

The decisions were taken at the Council’s 57th meeting, chaired by Union Finance Minister Nirmala Sitharaman. Addressing reporters afterwards, Sitharaman said the meeting focused on process reforms aimed at improving ease of doing business and cutting compliance burdens rather than changing GST rates. “The rate structure is settled,” she said, adding that last year’s efforts had focused on simplifying rates, while this year’s work centred on procedures.

Key decisions

Arrest powers and prosecution: Arrest powers of GST officers have been scrapped, which reports described as a shift towards trust-based tax administration. The threshold for launching criminal prosecution under GST goes up to Rs 5 crore from Rs 1 crore.
Refunds: The acknowledgement period for refund applications will be cut to 10 days from 15. Sitharaman said 90 per cent of eligible refund claims will be issued within three working days, a step aimed at easing liquidity for businesses and exporters.
Registration: Routine changes in GST registration will be accepted automatically, which is expected to reduce administrative delays.
Input tax credit: The Council expanded the scope of input tax credit (ITC), including relief for the telecom sector.
Delivery services: GST on certain delivery services, including services provided by unregistered delivery riders to platforms, will fall from 18 per cent to 5 per cent. The decision is expected to ease the tax burden on online deliveries and help delivery riders.

What it means

The package targets disputes and compliance friction, two long-standing complaints from businesses about the GST regime. Removing arrest powers and raising the prosecution threshold narrows the circumstances in which tax disputes can turn criminal, while faster refunds are meant to free up working capital. Detailed notifications implementing the changes, including effective dates and the legal amendments required, had not been published at the time of these reports.

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