India’s Goods and Services Tax Council recommended removing tax officials’ arrest powers and raising the prosecution threshold to 5 crore rupees. The changes are due to take effect on April 1, 2027.
At its 57th meeting, the Council also recommended faster, largely automated refunds and cutting the general penalty from 25,000 rupees to 10,000 rupees. Late filings, errors and delayed payments would trigger recovery, interest and a proportionate penalty, with no additional action.
The Council proposed extending refunds under the inverted duty structure to input services. Finance Minister Nirmala Sitharaman said the change would apply to input tax credit claimed on or after Nov. 1, 2026. The government also plans faceless assessments for central GST taxpayers registered in multiple states.
The recommendations would bar notices in cases involving less than 10,000 rupees and remove minimum punishment, leaving courts to decide whether to impose a fine, imprisonment or both. Input tax credit on employer-provided health and life insurance would also be allowed.
Sitharaman said the Council had addressed about 99% of issues related to doing business, rates and procedures. Experts welcomed faster refunds as a potential working-capital relief for companies, while saying the impact would depend on consistent implementation.