GST Council May End Officers' Arrest Powers and Raise the Prosecution Threshold to ₹5 Crore
The GST Council is likely to consider a major change in how GST law is enforced at its meeting on 7 October 2026 (its 57th meeting).
The main proposal: remove the power of GST officers to arrest a person under Section 69 of the Central GST (CGST) Act, 2017. Any arrest would then need an order from a court.
The Council may also raise the minimum amount of tax evasion for which criminal prosecution (a criminal case in court) can be started, to ₹5 crore. Routine disputes about how a product is classified, how it is valued or whether input tax credit (ITC) can be claimed would be kept out of the criminal process.
Of the 24 offences now listed for prosecution, 9 could be removed fully and 11 kept unchanged. The minimum jail term may be removed, and the maximum jail term in the middle band may be cut from three years to two.
The government's power to recover tax and impose penalties and interest would stay. The plan follows the GST rate cuts of September 2025 and the Jan Vishwas (Amendment of Provisions) Act, 2026, which removed jail terms for many minor offences. Any change approved by the Council will need amendments to the GST law by Parliament.
The GST Council (Article 279A)
The GST Council is a body made up of the Union Finance Minister and the finance ministers of all states. It decides the main rules of the Goods and Services Tax: tax rates, which goods and services are taxed or exempt, and the model GST laws. It was created by the Constitution itself under Article 279A, so it is a constitutional body. It is often called an example of cooperative federalism, because the Centre and states take tax decisions together.
Changes to arrest and prosecution rules need a change in the CGST Act and the matching state GST Acts. The GST Council recommends such changes so that the Centre and all states amend their laws in the same way. That is why this reform goes to the Council first.
GST Act Provisions on Offences and Arrests
The GST law has two kinds of punishment. The first is money punishment: tax demand, interest and penalty, decided by tax officers. The second is criminal punishment: jail, which only a criminal court can give after a trial (called prosecution). Jail is kept for serious, deliberate fraud, such as issuing fake invoices without supplying any goods to claim input tax credit. Section 132 of the CGST Act lists the offences and punishments, and Section 69 gives a Commissioner the power to authorise an officer to arrest a person.
The new proposal would go further than the 2023 changes. It would remove Section 69 arrest powers from officers, raise the prosecution threshold to ₹5 crore, drop the minimum jail term and remove nine offences from the prosecution list. Deliberate fraud would still be prosecuted, and arrests in such cases could happen through courts or the general criminal law.
- GST Council meeting: 7 October 2026 (57th meeting)
- Proposal: remove officers' arrest power under Section 69, CGST Act, 2017; arrests only with judicial authorisation
- Prosecution threshold proposed: ₹5 crore (now ₹2 crore generally, ₹1 crore for fake invoices, since the Finance Act, 2023)
- Prosecution offences: 24 at present; 9 may be removed, 11 kept unchanged
- Minimum sentence may be removed; middle-band maximum may fall from 3 years to 2 years
- Routine disputes on classification, valuation and input tax credit to stay outside criminal prosecution
- Jan Vishwas (Amendment of Provisions) Act, 2026: amended 79 Central Acts; 717 provisions decriminalised
- GST rate rationalisation (5% and 18%, plus 40%) in force since 22 September 2025