GST Law Relief: Preparations are underway to provide major relief to businessmen in the GST law. It has been proposed to withdraw the power of direct arrest from the GST officers. If the proposal is agreed to, it will now be mandatory to obtain court approval for arresting any person. Along with this, the threshold for initiating a criminal case (criminal prosecution) may also be increased from ₹1 crore to ₹5 crore. These important proposals are likely to be discussed in the GST Council meeting to be held on October 7.

This change will have a direct impact on millions of business people in the country. As per the existing rules, in some serious cases the GST officers can make arrests directly after obtaining the approval of a commissioner level officer. This includes cases like tax evasion, obtaining bogus Input Tax Credit (ITC) or wrongly claiming refund. Under the new proposal, this direct arresting power of officers could be eliminated. However, this does not mean that tax evaders will be exempt from prosecution.

The government is working on the next phase of reforms to further simplify the GST (Goods and Services Tax) regime. After the change in tax rates in September 2025, the emphasis is now on simplifying the rules, reducing costs for traders and determining the action according to the seriousness of the offence. Under this amendment of the rules relating to arrest and criminal cases has been suggested.

Tax collection and penalty proceedings will continue

According to the proposal, even after removing the power of arrest, the government will be able to collect taxes. If a trader has underpaid tax or wrongly claimed ITC, he will be charged the outstanding tax, interest and penalty. That means more attention will be given to monetary penalties and tax recovery rather than direct criminal prosecution in minor tax disputes.

However, in cases of willful tax evasion or serious evasion, the court will be open to prosecution. The proposal mentions raising the threshold for filing criminal cases from ₹1 crore to ₹5 crore, so that only major cases can be kept under the purview of criminal proceedings.

24 Proposal to grant relief in offences

There is also a proposal before the GST Council to relax the rules relating to 24 offences. Of these, 9 offenses have been asked to be abolished completely, while 11 offenses have been asked to be retained in their present form. It is also proposed to remove the provision of minimum sentence, so that the court is not bound to award imprisonment in every case. It also proposes to reduce the maximum sentence from 3 years to 2 years for moderate category offences.

In addition, consideration may be given to waiving late fees of small traders and making fines reasonable. Proposals like making registration easier for businesses, issuing refunds faster and simplifying the process of input tax credit are also part of this package.

Now technology will catch tax evasion

Bogus bills and tax evasion were difficult to catch in the initial phase of GST. At that time the power of arrest was seen as a way to prevent such crimes. But now in GST system matching of information provided by buyer and seller can be done easily. This increases the chances of early detection of bogus ITC.

The proposal would focus on detecting tax evasion and other irregularities with the help of technology instead of arresting them. However, all these changes are currently proposed and will require the approval of the GST Council and necessary amendments to the law to be implemented.