GST process reforms pin hope on data, tech to ensure compliance. Read the key points, why it matters and what businesses should watch next.
**GST Council Takes Up Process Reforms**
The GST Council is meeting to consider the second phase of a reform exercise that began with the rate reductions announced in September 2025. According to officials, the procedural changes on the table are intended to stabilise the indirect tax framework for roughly the next five to six years. The Council last met over 13 months ago, and officials attribute the gap to sustained consultations aimed at aligning all stakeholders. The absence of major revenue worries following the 2025 rate rationalisation is said to have made it easier to advance these discussions.
**Arrest Powers And Prosecution Limits**
A central proposal is the withdrawal of GST officers' power to arrest. Officials say this power has been used to create leverage over businesses well before any arrest actually occurs. Under the proposed approach, tax disputes would be settled through civil outcomes such as tax recovery, interest on delay and penalty, though prosecution would remain available and is expected to see some adjustments. The prosecution threshold is likely to rise from Rs 1 crore to Rs 5 crore, the minimum sentence may be dropped entirely so courts are not bound to award imprisonment, and a fine could be an option in every case. Notices would not be issued where the amount involved is below Rs 10,000, a change that would apply to new and pending cases, whether at adjudication or appeal. Officials note such matters form about a fifth of all cases by number but a negligible share of the money involved.
**Redesign Around Data And Judgement**
The Council will also examine issues spanning an entity's lifecycle, including registration, return filing and correction, refunds and responses to demands. Officials describe a single guiding principle: the system should handle what can be done from data, leaving officers to exercise judgement. One significant change concerns export of services. Using the example of a testing laboratory that receives a protot…
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