From scrapping arrest powers to lower penalties: 7 GST Council meet takeaways

Finance Minister Nirmala Sitharaman outlined the key recommendations after the GST Council meeting on Thursday. No GST rates were changed at the meeting.The Council did not make any changes to GST rates at the meeting. (Photo: GettyImages)New Delhi,Oct 8, 2026 18:35 ISTThe GST Council has recommended a series of changes to GST rules, including curbs on the punitive powers of tax officials and a higher threshold for prosecution in GST offences. The changes are aimed at making GST compliance easier for businesses.Finance Minister Nirmala Sitharaman outlined the key recommendations after the GST Council meeting on Thursday. No GST rates were changed at the meeting.Mahesh Jaising, Partner and Indirect Tax Leader, Deloitte India, said, “The 57th GST Council meeting marks a defining moment in India’s indirect tax journey. Coming after a gap of more than a year, the Council has largely delivered on the expectations of the industry, with recommendations that reflect the continued evolution of GST 2.0, with a clear focus on simplification, greater certainty, and a more taxpayer-centric approach to compliance.”He further said, “As GST enters its tenth year, these decisions send a strong signal that the next phase of reform will be driven by simplification, certainty, and strengthening confidence in the GST framework and advancing India’s ease of doing business agenda. We are clearly in the phase of GST moving from stabilisation to optimisation.” Here are the key takeaways from the GST Council meeting:Arrest powers under GST to be removed The GST Council has recommended removing the power of arrest under GST.The move comes as businesses have raised concerns over stringent tax practices and sought better ease of doing business.Prosecution threshold raised to Rs 5 croreThe threshold for prosecution for GST offences has been raised to Rs 5 crore from Rs 1 crore.The minimum punishment has also been removed. The punishment, which can include a fine, imprisonment or both, will now be left to judicial discretion in each case.General penalty cut to Rs 10,000The general penalty has been reduced to Rs 10,000 from Rs 25,000 where no specific penalty is provided.The Council has also recommended that no notices be issued for monetary thresholds of Rs 10,000 or below.Relief for delayed payments and errorsA taxpayer who files a return late, makes an error or delays payment will face recovery, interest and a proportionate penalty.However, there will be nothing beyond these measures, according to the recommendations outlined by Sitharaman.Smoother movement of goodsThe GST Council has also recommended changes aimed at making the movement of goods smoother.Goods can be inspected, detained or seized only by the officer of the supplier state or the destination state, Sitharaman said.No change in GST ratesThe Council did not make any changes to GST rates at the meeting.GST rate-related matters will now be taken up once a year at a meeting called specifically for the purpose.No MDR discussionSitharaman also said there were no discussions related to merchant discount rate (MDR) at the GST Council meeting on Thursday.Ashish Kumar, Head – Vayana GSP, said, “GST reforms focused on ITC safeguards, refund efficiency, and reducing procedural friction come at an important time. Any reform that improves the flow of credits and refunds effectively releases capital back into supply chains."He added, "For MSMEs, this translates into stronger cash flows and greater access to invoice-backed financing, helping convert compliance efficiency into business growth."- Ends