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GST Council scraps arrest powers, raises prosecution bar: explained

The GST Council has removed the power of tax officers to arrest people in GST cases. It also raised the bar for criminal prosecution and cut general penalties.

The Council recommended deleting Section 69 of the CGST Act. It raised the prosecution threshold from 1 crore rupees to 5 crore rupees. The general penalty was reduced from 25,000 rupees to 10,000 rupees.

The GST Law Committee had earlier split on the arrest question. One view said better return-filing checks would cut fraud, so arrest powers were not needed. The other view said losing the power could hurt compliance.

Finance Minister Nirmala Sitharaman said the aim was easier business and fairer enforcement. She said officers would rely on recovery, interest and proportionate penalties instead of arrests.

Five states had opposed removing the arrest power. They feared weaker enforcement against fraud. The process reforms will take effect from April 1, 2027. No GST rates were changed at the meeting.

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