Summary: The Government of India issued Frequently Asked Questions (FAQs) on reforms related to litigation management on 9 October 2026, clarifying the proposed minimum monetary threshold for issuing show-cause notices under Sections 73, 74 and 74A of the CGST Act, 2017, and changes concerning voluntary payments made for conclusion of proceedings. Under the proposed framework, a show-cause notice may be issued where the relevant tax amount is ₹10,000 or more, including when the amount is exactly ₹10,000. The threshold is to be determined by aggregating the tax involved under CGST, SGST/UTGST, IGST and applicable cess, rather than applying a separate minimum to each tax head.
The FAQs clarify that interest, late fees and penalties are excluded when determining the ₹10,000 threshold. However, tax amounts relating to input tax credit wrongly availed or utilised are included, with amounts across different tax heads aggregated where applicable. These clarifications are intended to establish a uniform method for determining whether the proposed minimum monetary limit for issuing demand notices has been satisfied.
The second set of FAQs addresses the proposed substitution of the term “penalty” with “charge” under provisions governing voluntary payment and conclusion of proceedings. The Government clarifies that this terminology change would not alter the amount payable by taxpayers. To obtain the benefit of conclusion of proceedings, a noticee would continue to pay the applicable tax, interest and prescribed reduced amount within the specified timeline. The amount currently described as penalty would be designated as a charge under the amended provisions and deposited under the “Others” payment head. The FAQs describe proposed reforms and their intended operation; their publication alone does not establish that the statutory amendments have taken effect.
Economy
Frequently Asked Questions (FAQs) on reforms related to litigation management
Posted On: 09 OCT 2026 4:39PM
| S. No. | Question | Answer |
|---|---|---|
| Minimum threshold for issuance of show cause notices under sections 73, 74 & 74A of the CGST Act, 2017 | ||
| 1. | If the amount of tax is exactly ₹10,000, will the minimum threshold for issuance of a show-cause notice be satisfied? | Yes. The minimum threshold shall be considered to have been met where the relevant amount of tax, including the applicable cess covered by the Explanation, is ₹10,000 or more. Accordingly, where the amount of tax is exactly ₹ 10,000 a show cause notice may be issued. |
| 2. | How is the minimum threshold of ₹10,000 to be determined under sections 73, 74 or 74A of the CGST Act, 2017, where the demand involves more than one tax head, such as CGST, SGST/UTGST, IGST and cess? | The minimum threshold of ₹10,000 shall be determined with reference to the aggregate amount of tax involved under CGST, SGST/UTGST, IGST and cess, as applicable. It is not necessary for the amount under each individual tax head to independently meet the threshold of ₹10,000. |
| 3. | Will interest, late fee or penalty be taken into account for determining the minimum threshold of ₹10,000 under sections 73, 74 or 74A of the CGST Act, 2017? | No. The minimum threshold of ₹10,000 shall be determined with reference to the amount of tax including the applicable cess. Interest, late fee and penalty shall not be included for determining whether the threshold is met. |
| 4. | Will the minimum threshold of ₹10,000 for issuance of demand notices, apply in cases involving input tax credit wrongly availed or utilised? | Yes. The amount of tax relating to input tax credit wrongly availed or utilised, shall be taken into account for determining whether the minimum threshold of ₹10,000 is met. Where such amounts arise under more than one tax head, the relevant amounts shall be aggregated for this purpose. |
| Deeming of penalty payment as charge and rationalization of penalty, in case of voluntary payment under the CGST Act, 2017 | ||
| 1. | Does substitution of the term “penalty” with “charge” under the CGST Act, change the amount payable by the taxpayer under the voluntary payment provisions? | No. The substitution of the term “penalty” with “charge” shall not alter the quantum of the amount payable. The amount payable shall remain the same as prescribed under the relevant provisions of the CGST Act. |
| 2. | Will the amount referred to as “charge” (substitution of the term “penalty”) under the CGST Act, be payable in addition to the tax and interest? | Yes. To avail the benefit of conclusion of proceedings, the noticee shall be required to pay the tax along with applicable interest and the prescribed reduced amount of penalty within the specified timeline. Upon such payment, the amount presently referred to as “penalty” under the relevant provision shall be referred to as “charge” under the amended provision. |
| 3. | Under which head the amount payable as “charge” should be deposited? | The amount payable as “charge” shall be deposited under the head “Others”, in accordance with the prescribed payment mechanism. |
(Faq ID: 160393) Visitor Counter: 104
