Nirmala Sitharaman chairs the 57th GST Council meeting as major taxpayer-friendly reforms are approved. (IMG: X)
New Delhi: The GST Council has approved a major set of taxpayer-friendly reforms, removing arrest powers of tax officers and raising the prosecution threshold from Rs 1 crore to Rs 5 crore.
The 57th GST Council meeting also cleared faster GST refunds, easier registration changes and wider input tax credit provisions, offering businesses significant relief from compliance pressures.
In a major move aimed at easing compliance for businesses, the GST Council on Thursday approved a series of procedural reforms that could change how taxpayers deal with GST authorities. The decisions were taken during the 57th meeting of the GST Council in New Delhi, chaired by Union Finance Minister Nirmala Sitharaman.
The biggest decision was the removal of arrest powers available to tax officers in GST-related cases. The Council also increased the prosecution threshold from the existing Rs 1 crore to Rs 5 crore. The changes are expected to reduce the compliance burden and provide greater certainty to businesses dealing with GST investigations and proceedings.
Finance Minister Nirmala Sitharaman said the latest meeting was focused on process and compliance reforms rather than changes in GST rates.
The government had concentrated on simplifying the GST rate structure in the previous phase of reforms. The latest exercise has instead focused on making GST procedures simpler, faster and more business-friendly.
This means taxpayers should not expect a fresh GST rate restructuring from the decisions announced at the meeting.
One of the most significant relief measures concerns GST refunds.
The acknowledgement period for refund applications will now be reduced to 10 days from the existing 15 days. The Council has also decided that 90 per cent of eligible refund claims will be processed within three working days.
The move could provide a major liquidity boost to businesses, particularly exporters and companies with significant working-capital requirements.
Faster refunds are expected to reduce the amount of money locked up in the tax system and improve cash flow for eligible taxpayers.
The Council has also approved automatic acceptance of routine changes in GST registration.
The reform is aimed at reducing unnecessary administrative intervention and speeding up routine compliance-related processes.
For businesses, the change could mean fewer procedural delays when making standard updates to their GST registration details.
The GST Council also expanded the scope of input tax credit available to businesses. Additional expenditure categories, including telecom towers and employer-provided insurance cover, will now be eligible for input tax credit under the approved changes. The move is expected to reduce the effective tax burden for eligible businesses by allowing them to offset GST paid on qualifying inputs and expenses.
The latest decisions are significant because they focus on the day-to-day experience of GST taxpayers rather than simply changing tax rates. For businesses, the removal of arrest powers, higher prosecution threshold, faster refunds, easier registration procedures and expanded input tax credit could collectively reduce compliance friction.
The measures also come at a time when businesses are seeking greater clarity and predictability in the GST framework. For smaller businesses in particular, procedural complexity and uncertainty around tax proceedings can add significant operational costs. The latest reforms are aimed at addressing some of those concerns.
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The 57th GST Council meeting was attended by representatives from the Centre and state governments.
Chief Ministers from Delhi, Goa, Haryana, Jammu and Kashmir, Karnataka, Kerala, Maharashtra and Meghalaya participated in the meeting. Deputy Chief Ministers from Manipur and Telangana were also among the participants.
Finance Ministers and senior representatives from states and Union Territories attended the meeting along with Revenue Department Secretary, CBIC Chairman and members, and senior Finance Ministry officials. The meeting had originally been scheduled for Wednesday but was postponed due to unavoidable circumstances.
