Arrest powers under GST may be removed in tax cases, jail term may be reduced
New Delhi, Oct. 4, 2026: The government is looking at significant changes to the Goods and Services Tax (GST) regime and could possibly take away powers to arrest in some tax-related cases. The proposed reforms may also see jail terms reduced for some offenses and the threshold for prosecution increased from ₹5 crore to ₹10 crore.
The proposals could be taken up in a GST Council meeting in the days to come. If approved, changes could provide significant relief to businesses and taxpayers caught up in disputes around GST.
GST could change arrest powers
The current GST regime has the power to arrest persons in certain serious cases related to tax evasion and other specified offenses.
The changes being proposed could either strip away that power or greatly curtail its reach. The move is being seen as part of the effort to bring more balance in GST-related enforcement and reduce the use of criminal provisions in tax disputes.
But the final decision will be taken after discussion in the GST Council and government approval.
Prosecution threshold may be raised from ₹5 crore to ₹10 crore
One of the key proposals relates to the threshold of prosecution under GST.
Currently, prosecution can be initiated in certain cases of tax evasion above the threshold of ₹5 crore. The government is reportedly considering increasing the limit to ₹10 crore.
The amended provisions, if approved, could save cases involving tax amount between Rs 5 crore and Rs 10 crore from criminal prosecution.
Prison Time Could Be Reduced
The government is also weighing the possibility of lowering jail terms for certain GST offenses.
Serious GST offenses already attract imprisonment in addition to financial penalties. However, the proposed changes may allow for a reduction in severity of punishment for some offenses but still remain tough on the serious cases of deliberate tax evasion.
The goal could be to make a sharper distinction between true tax disputes, compliance errors and serious tax fraud.
GST Council likely to take final call
The GST Council is expected to deliberate on the proposals before taking a final decision. If
Frequently Asked Questions
1. Will the provision of arrest under GST be deleted?
The government is reportedly considering amendments in the arrest provisions under GST. But it should not be assumed that a final decision has been taken until the proposed amendments have been formally adopted and notified”.
2. Can the GST prosecution limit be raised from Rs 5 crore to Rs 10 crore?
Of course. Among the proposals under consideration is to increase the prosecution threshold from ₹5 crore to ₹10 crore. The proposal would have to pass through the appropriate process to become law.
4. When will the new GST rules be implemented?
The changes will take effect only after they are formally approved and legal amendments or notifications are issued. In the interim, the present GST provisions will remain in force.
5. Will businesses get full relief from GST prosecution?
Not so much. Even with a higher prosecution threshold, enforcement action may still be taken under the relevant law in the case of serious or intentional tax evasion
