The Goods and Services Tax Council on Thursday approved the biggest decriminalisation of the GST regime since its launch. The power of arrest is being removed from the GST law, and the prosecution threshold is being raised from Rs 1 crore to Rs 5 crore.

The decisions were taken at the 57th meeting of the Council, chaired by Finance Minister Nirmala Sitharaman at Bharat Mandapam in New Delhi. The Council also cut the general penalty from Rs 25,000 to Rs 10,000 and scrapped the minimum mandatory punishment for offences.

Under the new framework, a taxpayer who files late, makes an error or delays payment will face recovery, interest and a proportionate penalty, but nothing beyond that. Criminal prosecution will now be reserved for cases involving Rs 5 crore or more.

The Council also sped up refunds: acknowledgement time drops from 15 to 10 days, and 90 per cent of eligible refund claims will be issued within three working days. No GST rates were changed. The move signals a shift from criminal deterrence to trust-based compliance.