New Delhi: The GST Council has recommended sweeping changes to the Goods and Services Tax (GST) framework, including the removal of arrest provisions, raising the prosecution threshold from ₹1 crore to ₹5 crore and simplifying registration, refunds and compliance procedures.
The recommendations were made at the Council’s 57th meeting, chaired by Union Finance Minister Nirmala Sitharaman in New Delhi on Thursday. The proposed measures aim to reduce compliance costs, improve ease of doing business and strengthen a trust-based tax administration.
Relief for taxpayers and businesses
The Council recommended removing Section 69 of the Central GST Act, which provides for arrest powers under GST. It also proposed rationalising criminal penalties and reducing the maximum general penalty from ₹25,000 to ₹10,000.
The Council recommended faster, system-based processing of refunds, including automatic sanction of eligible refunds of excess balances in electronic cash ledgers. It also proposed simplifying GST registration and cancellation procedures, with automatic processing in specified cases.
To reduce disputes and improve working capital, the Council recommended expanding input tax credit (ITC) refunds in certain cases involving capital goods and input services. It also proposed removing restrictions on ITC for specified expenses, including outdoor catering, health and life insurance, subject to applicable provisions.
Small businesses, e-commerce sellers to benefit
The proposed reforms include a simplified GST registration mechanism for small sellers supplying goods through e-commerce platforms in states where they have no physical presence, subject to conditions.
The Council also approved in principle an optional Annual Return Quarterly Payment scheme for businesses with annual turnover of up to ₹5 crore that exclusively supply goods or services to unregistered consumers.
Other recommendations include reducing late fees for eligible small taxpayers, improving the reconciliation of tax liabilities and ITC, and simplifying procedures for exports and cross-border transactions.
The Council also proposed tighter safeguards for goods inspections, recommending that vehicles carrying goods be intercepted only on specific intelligence and with authorisation from an officer of at least Joint Commissioner rank, subject to specified exceptions.
