GST Council Meeting: Changes to Tax Officers’ Powers and Increased Prosecution Threshold
The Goods and Services Tax (GST) Council has recommended several reforms aimed at simplifying compliance and reducing procedural burdens, while maintaining the current tax rate structure. Key changes include the revocation of arrest powers for tax officers and an increase in the prosecution threshold from Rs 1 crore to Rs 5 crore. The Council also introduced common standards for GST notices and proceedings, stating that no notices will be issued for amounts of Rs 10,000 or below, with pending notices below this threshold being withdrawn.
Key Decisions from the GST Council Meeting
Among the significant decisions made during the 57th GST Council meeting, chaired by Finance Minister Nirmala Sitharaman, the minimum punishment for offences has been removed. Courts will now determine whether to impose fines, imprisonment, or both. Additionally, the general penalty for cases without a specific penalty has been reduced from Rs 25,000 to Rs 10,000.
The Council has approved easier compliance norms for small sellers on e-commerce platforms. Employers will also be allowed to claim input tax credit on GST paid for employee insurance cover. The time limit for acknowledging refund claims has been shortened from 15 days to 10 days. Sitharaman expressed expectations that these reforms will stabilize over the next year.
Additional Reforms and Considerations
The existing GST rate structure will remain unchanged, with any rate adjustments to be considered only once a year. A Committee of Officers has been tasked with examining measures to protect genuine buyers who possess valid invoices and have fully paid their suppliers. This committee is expected to submit its findings within three months.
The Council is also looking into further automation of GST registration processes. Currently, about 61% of registrations are approved within three working days without officer intervention. Additionally, around 66% of amendment applications are proposed to be processed automatically. The Council aims to simplify the restoration of registrations suspended due to procedural lapses and to streamline the cancellation process following business closures.
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