GST Council to Consider Removing Arrest Powers and Speeding Up Export Refunds
The 57th meeting of the GST Council, set for 7 October 2026, is expected to consider a large package of changes to the Goods and Services Tax (GST) law. The focus is on easier compliance, not on changing tax rates.
Arrest powers may go: One proposal is to remove the power to arrest people under the GST law. Tax cheating would then be handled mainly through civil steps (recovering the tax, interest and penalty). Prosecution (a criminal case in court) would stay for serious cases, and the money limit for starting prosecution would rise to ₹5 crore.
Lighter punishments: An expert committee on GST offences has suggested removing 9 offences fully and 1 offence partly, softening 24, and keeping 11. It also suggests removing minimum jail terms, allowing a fine in all cases, and cutting the maximum jail term for middle-level offences from 3 years to 2 years.
Faster refunds: 90% of eligible refund claims would be paid automatically after a computer risk check, and the rest after checking. Refund applications would have to be acknowledged within 10 days; if the officer does nothing, the application would be treated as acknowledged. About 38,700 taxpayers currently claim export refunds.
Relief for small taxpayers: No show-cause notice (a formal letter asking a taxpayer to explain why tax should not be demanded) would be issued for amounts below ₹10,000 in some cases, late fees for delayed returns would be waived for small taxpayers, and eligible applicants could get GST registration automatically within three working days.
All of these are proposals. They take effect only if the Council recommends them and Parliament and the states change the GST laws where needed.
The GST Council (Article 279A)
The GST Council is the body that decides the main rules of GST for the whole country. It brings together the Union Finance Minister and the finance ministers of all states. It was created by the Constitution itself, through Article 279A, which was added by the 101st Constitutional Amendment Act, 2016. Because both the Centre and the states collect GST, they need one shared table where they agree on rules, and the Council is that table.
The arrest, prosecution and refund changes are being placed before the 57th GST Council meeting. If the Council recommends them, the Centre and the states will then have to amend their GST laws to put them into effect.
GST Act Provisions on Offences and Arrests
The GST law punishes wrongdoing in two ways. The first is money punishment: tax demand, interest and penalty, decided by tax officers. The second is criminal punishment: jail and fine, decided by a court after prosecution. Arrest is the step that allows officers to take a suspect into custody during a criminal case. The current reform question is how much of the criminal side is really needed.
The 57th Council meeting is set to consider removing arrest provisions and shifting most GST enforcement to civil recovery, keeping courts and jail only for serious, high-value fraud.
Zero-Rated Supplies Under GST: Exports and SEZ Supplies
A zero-rated supply is a sale on which the final GST burden is zero, while the seller can still get back all the GST it paid on its inputs. Under Indian law, exports and supplies to Special Economic Zones (SEZs) are zero-rated. The idea is simple: India should export goods and services, not taxes, so that Indian sellers stay competitive abroad. Because exporters have paid GST on inputs, they depend on quick refunds to keep their cash flowing.
Fast refunds matter most to exporters, whose money is stuck in GST paid on inputs. The proposal to release 90% automatically after a risk check, with a deemed acknowledgement after 10 days, aims to free that money quickly for about 38,700 export-refund claimants.
- 57th GST Council meeting: 7 October 2026
- GST Council: Article 279A, added by the 101st Amendment Act, 2016; decisions need three-fourths of weighted votes (Centre one-third, states two-thirds)
- Mohit Minerals (2022): Council recommendations not binding
- Proposed prosecution threshold: ₹5 crore (current general threshold ₹2 crore since the Finance Act, 2023)
- Expert committee on offences: 9 removed, 1 partly removed, 24 softened, 11 retained
- Maximum jail for middle-level offences proposed to fall from 3 years to 2 years
- Refund: 90% automatic after risk check; acknowledgement within 10 days
- About 38,700 taxpayers claim export refunds
- No show-cause notice for amounts below ₹10,000 in specified cases; about 11.3 lakh such small notices issued since 2017
- Automatic registration within 3 working days for eligible applicants
- Arrest power: Section 69, CGST Act; offences: Section 132; refunds: Section 54; zero-rating: Section 16, IGST Act