At its 57th meeting in New Delhi on 8 October 2026, chaired by Union Finance Minister Nirmala Sitharaman, the GST Council recommended complete withdrawal of arrest powers under GST by omitting Section 69 of the CGST Act, 2017. It also recommended raising the monetary threshold for prosecution from Rs 1 crore to Rs 5 crore, according to the official press release.
What changed
On offences under Section 132, the Council recommended omitting clause (i) of Section 132(1), deleting the words “evades tax” in clause (e) and “or in any other manner deals with” in clause (h), and confining clause (c) to fraudulent availment of input tax credit without receipt of goods or services or without a valid invoice. Punishments are to be rationalised.
Other recommendations include reducing the maximum general penalty under Section 125 from Rs 25,000 to Rs 10,000, no show cause notice where tax involved is below Rs 10,000, a cap of Rs 40 crore on pre-deposit in penalty-only appeals, a right to object, with a personal hearing, where the electronic credit ledger is blocked under Rule 86A, and interception of goods in transit only on specific intelligence with authorisation from a Joint Commissioner or above.
Why it matters
These are recommendations. The release itself records that the arrest and prosecution changes require legislative amendment. Until Parliament amends the CGST Act, and the corresponding State GST laws are amended, Section 69 remains on the statute book and summons, searches and arrests can continue under the existing law.
The direction of policy is clear, however: criminal consequences are to be reserved for serious cases such as fake invoicing, while procedural and smaller defaults move to civil penalties. For businesses in Uttar Pradesh, where both CGST and UP State GST officers are active, the State law amendment will matter equally.
Practical points
- Do not treat a summons as optional on the basis of these recommendations; the current law continues to apply.
- Review pending investigations involving tax between Rs 1 crore and Rs 5 crore, since the proposed threshold may become relevant once enacted.
- Where fake ITC is alleged, note that clause (c) of Section 132(1) is expected to remain an offence.
- Watch for the Finance Bill or amendment bill and the effective date of each change.
Sources: PIB, 8 Oct 2026; GST Council press release, Oct 2026.
For a confidential discussion on GST summons, arrest and prosecution, see GST Investigation, Summons & Arrest Lawyer.
General legal information only; not legal advice or solicitation.
