The GST Council has removed the power of tax officials to arrest people in GST cases. It also raised the prosecution threshold from 1 crore rupees to 5 crore rupees.

Finance Minister Nirmala Sitharaman said arrest in criminal cases will now be made by enforcement agencies, not tax officials. The general penalty was cut from 25,000 rupees to 10,000 rupees. Late filers will face recovery, interest, and proportionate penalty, but nothing beyond that.

No GST rates were changed. Rate matters will be taken up once a year. The process reforms will be implemented from April 1, 2027, giving the system a year to stabilize.

The move follows months of talks between the Centre, states, and industry. Businesses had complained that arrest provisions meant for serious fraud were being used in disputes that should have stayed civil.

The Council had been divided earlier. Some members wanted arrest powers removed because better return-filing safeguards reduce fraud. Others said keeping the power checks misuse. The final call, as expected, rested with the Council.