Five states have opposed a proposal to remove the arrest powers of tax officials under the GST framework, setting up a debate over tax enforcement.

The GST Council has proposed scrapping officers’ powers to make arrests and raising the prosecution threshold from Rs 1 crore to Rs 5 crore. The move is meant to ease compliance pressure on businesses, especially small sellers on e-commerce platforms.

Finance Minister Nirmala Sitharaman announced the changes, saying the council had also dealt with anomalies in input tax credit. Notices under Rs 10,000 would no longer be issued, she said.

Opposing states argue that removing arrest powers could weaken deterrence against tax fraud. The proposal is part of a wider package that includes faster refunds, with a target of resolving claims within three days.

The disagreement is expected to be taken up at the council’s next meeting. The reforms aim to lower compliance costs while keeping a check on evasion.