Summary: The Government of India issued Frequently Asked Questions (FAQs) on 9 October 2026 explaining the GST Council’s recommendations for rationalisation and decriminalisation of arrest and prosecution provisions under GST. The principal recommendation is to remove the statutory arrest provisions and increase the monetary threshold for launching prosecution from ₹1 crore to ₹5 crore. Under the proposed framework, persons would no longer be arrested for offences under GST law, although tax authorities could initiate prosecution before the competent court where the amount involved exceeds ₹5 crore. These recommendations represent proposed legislative changes and should not be treated as already effective merely on the basis of the FAQs.
The proposed amendments also rationalise imprisonment and penalties under Section 132 of the CGST Act. For offences involving amounts exceeding ₹10 crore, the maximum punishment would be imprisonment up to five years, a fine, or both. For amounts exceeding ₹5 crore but not exceeding ₹10 crore, imprisonment would be limited to two years, a fine, or both. The proposed substitution of mandatory imprisonment and fine with imprisonment or fine or both would provide courts greater sentencing discretion. The existing requirement of a minimum imprisonment of six months under Section 132(3) is also proposed to be removed.
Further, the Council recommended narrowing the scope of certain prosecutable offences under Section 132(1). Clause (i), concerning specified contraventions involving the supply of services, is proposed to be omitted. Clause (e) would be confined to fraudulent refunds by removing the expression “evades tax”, while clause (h) would be narrowed by deleting the expression “or in any other manner deals with”. Together, these measures are intended to reduce criminal exposure for taxpayers, focus prosecution on higher-value offences and provide greater proportionality in sentencing.
Economy
Frequently Asked Questions (FAQs) on rationalisation and decriminalisation of arrest and prosecution provisions in GST
Posted On: 09 OCT 2026 4:51PM
| S. No. | Question | Answer |
|---|---|---|
| 13. | What changes have been recommended by the GST Council in respect of arrest and prosecution provision under GST? | The GST Council has recommended:
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| 14. | Can someone be arrested under GST after the proposed amendment? | No. The arrest provisions under GST are now proposed to be removed, and no person shall be arrested for an offence under the GST law.However, prosecution may still be launched before the competent Court, on a complaint filed by the tax authorities, where the amount involved exceeds Rs. 5 crore. |
| 15. | In which cases can someone be prosecuted under GST? | Prosecution may be launched for offences under section 132(1) where the evaded tax amount exceeds Rs. 5 crore, as against the present threshold of Rs. 1 crore. |
| 17. | What will be the punishment on conviction after the amendment? | The maximum term of imprisonment is being rationalised as under:
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| 18. | Someone who is convicted, will imprisonment be compulsory? | No. The punishment is proposed to be changed from “imprisonment and fine” to “imprisonment or fine or both”, so that the Court may have discretion of awarding punishment.Further, the requirement of a minimum imprisonment of six months under section 132(3) is being removed, so as to confer discretion on the Court. |
| 19 | Which offences are being omitted or narrowed for the purpose of prosecution? |
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