The GST Council has recommended scrapping the arrest powers of tax officers, in a landmark overhaul of GST enforcement announced by Finance Minister Nirmala Sitharaman on October 8.

The council proposed removing Section 69 of the CGST Act entirely. The prosecution threshold rises from Rs 1 crore to Rs 5 crore, and the general penalty falls from Rs 25,000 to Rs 10,000. Late or mistaken taxpayers will face recovery, interest and proportionate penalties — “and nothing beyond that,” Sitharaman said.

The package also speeds up refunds: 90 percent of eligible claims within three working days, with acknowledgement in 10 days. Input tax credit expands to employer-provided insurance and telecom towers. No GST rates were changed.

Prime Minister Narendra Modi called it “trust-based administration.” The reforms take effect from April 1, 2027, and GST rate changes will now happen only once a year.

Sitharaman stressed the goal was that “honest taxpayers are not to be bothered,” echoing the Prime Minister’s push for trust-based administration. The changes must be passed by Parliament before taking effect.