GST Council meeting: Arresting powers of tax officers scrapped, prosecution threshold raised to Rs 5 cror

GST Council Curbs Arrest Powers

The GST Council has decided to withdraw the power of tax officers to arrest in GST matters and has raised the monetary threshold for launching prosecution to Rs 5 crore. The decisions were taken at a Council meeting, as reported on 8 October 2026. The move changes two of the most contentious features of GST enforcement: the ability to detain or arrest a person during investigation, and the point at which a taxpayer becomes liable to criminal prosecution rather than only penalty proceedings.

What Changed

Under the revised approach, tax officers will no longer have arresting powers in GST cases. Separately, prosecution will now be initiated only where the amount involved exceeds Rs 5 crore. Together, these changes shift the enforcement framework towards monetary penalties and adjudication for smaller and mid-sized matters, while reserving criminal proceedings for cases above the new threshold. The Council's decision follows long-standing industry representations that arrest provisions created disproportionate fear and disruption, particularly where disputes involved interpretation of law rather than clear evasion.

Why It Matters For Businesses

For companies and compliance teams, the immediate effect is a lower risk of personal exposure for directors, promoters and authorised signatories during investigations. Arrest was previously a live concern in cases involving alleged evasion, even before final adjudication. Raising the prosecution threshold to Rs 5 crore also means a large number of disputes will remain in the civil, penalty-based stream rather than the criminal one. This can reduce pressure on businesses to settle matters quickly out of fear of prosecution, and may encourage more taxpayers to contest demands through appeals. It also changes the calculus for officers, who will rely more on summons, document production and monetary penalties.

What To Watch Next

The key question is how the decisions are given effect. Arrest po…