GST Council abolishes arrest powers for tax officers

The GST Council on Thursday scrapped the arrest power of tax officers, four days after The Indian Express reported that the move was on its way. The Finance Ministry also announced that the prosecution threshold was raised to Rs 5 crore from 1 crore. The proposal was expected to be taken up during the GST Council meeting in a bid to boost investor sentiment and allay concerns about overreach by tax authorities, The Indian Express had reported, citing two persons aware of the development.

"The rate structure is settled, so the Council has turned to how the tax works day to day," the finance ministry said on Thursday, adding that GST rate changes will now happen once a year. While the minimum punishment has been removed, the punishment — whether fine, imprisonment, or both — is left to judicial discretion in every case.

The general penalty comes down from Rs 25,000 to Rs 10,000, the ministry said. This applies where no specific penalty is provided. ‎‎ The Centre and the states are learnt to have held several meetings over the last eight-nine months, including involvement at the top levels of the Union government, to reach a broad consensus on removal of the arrest provisions under GST, which were being seen as a major impediment for traders and businesses.

The move is viewed as urgent as several arrests of high-ranking functionaries were made in recent times under the GST provisions that were termed by industry leaders as an overreach.