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GST Council eases enforcement norms, removes arrest power and cuts general penalty
The GST Council on Thursday has decided to remove the power of arrest under the Goods and Services Tax regime while raising the threshold for prosecution five-fold to Rs 5 crore in a major overhaul of GST enforcement and compliance rules.
Under the changes approved at the 57th GST Council meeting, the prosecution threshold will rise from Rs 1 crore to Rs 5 crore. The minimum punishment will also be removed, with the decision on whether to impose a fine, imprisonment or both left to judicial discretion.
The Council has also reduced the general penalty, applicable where no specific penalty is prescribed, from Rs 25,000 to Rs 10,000.
The move marks a significant shift in the GST enforcement framework, with the government saying that improved invoice-level data matching and analytics now allow enforcement to rely more on detection rather than deterrence.
The Council has separately addressed the issue of double taxation on services bought and resold in the same line of business.
Under the reform, such services will carry tax once rather than twice. Hotel accommodation costing up to Rs 7,500 a night booked through an agent, restaurant and catering services, and passenger transport are among the common instances covered.
More from BusinessThe Council said credit had earlier been denied because these services were taxed at 5 per cent without input tax credit. Under the new framework, the tax chain will now continue through the transaction.
