GST Arrest Powers Face State Opposition as Council Reviews Major Reforms

NEW DELHI — The proposed overhaul of India’s GST enforcement system has triggered opposition from several states as the 57th GST Council meeting considers whether to remove the power of GST officers to arrest taxpayers before criminality is established. The proposal is part of a wider set of reforms aimed at making GST compliance simpler, reducing disputes and creating a more taxpayer-friendly system.

Under the proposed changes, GST officers would no longer have the power to make pre-prosecution arrests. If deliberate tax evasion or other criminality is established and prosecution begins, an arrest could require a court order. The government has argued that advances in invoice matching and GST data systems have strengthened the ability to detect fraud, reducing the need for direct arrest powers by tax officers. The government would continue to have powers to recover taxes, interest and penalties.

However, Maharashtra, Gujarat, Uttar Pradesh, Karnataka and Andhra Pradesh have raised objections to removing the arrest provision completely. The states have argued that some form of enforcement power should remain available in serious GST violations, particularly major cases of tax evasion and fraud. The disagreement has added an important point of discussion to the Council’s deliberations.

The reform package also proposes raising the threshold for launching criminal prosecution under GST from ₹1 crore to ₹5 crore. Other measures under consideration include easier GST registration, faster refunds, wider access to input tax credit, protection for genuine buyers when suppliers default, simpler compliance for smaller businesses and changes to dispute resolution.

The 57th GST Council meeting, chaired by Union Finance Minister Nirmala Sitharaman, is being held in New Delhi. The focus of the meeting is largely on compliance and enforcement reforms rather than a major new round of GST rate changes. Any changes to the law would require the necessary legislative process after the Council reaches a decision.

The final decision on the proposed removal of GST officers’ arrest powers has not yet been announced. The outcome will be closely watched as the government seeks to balance taxpayer protection and easier compliance with the need for strong action against serious tax evasion.