The Goods And Services Tax (GST) council has overhauled its common enforcement standards for notices and proceedings at its 57th annual meeting in 2026 on Thursday. The council recommended removing arrest powers under GST as well recommeding that goods be seized only by officers of the destination state or the supplier state.
Goods will now be intercepted only on specific intelligence. Random GST officers will no longer be able to stop goods and demand papers. It will also won't issue notices for a monetary threshold below Rs 10,000. The prosecution threshold was further recommended to be raised from Rs 1 crore to Rs 5 crore. The general penalty will be reduced to Rs 10,000 from Rs 50,000.
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For businesses transporting goods across states, the proposal could streamline logistics by reducing the likelihood of multiple inspections en route, with physical checks largely confined to the point of origin and destination based on intelligence inputs.
At the same time, raising the prosecution threshold and doing away with GST arrest powers would signal a more facilitative enforcement approach, easing compliance concerns and lowering litigation risks for businesses.
One of the most prominent outcomes from the meeting was that there would be no changes to the GST rate. The council also shifted its focus to process reforms such as registration, returns, refunds, litigation and Input Tax Credit.
The chief reform includes a faster registration process for GST, with low-risk application being approved automatically within three working days. Upto 65% of eligible registration amendments will now be auto-approved. The council also cut the GST refund acknowledgement timeline to 10 days from 15 days. About 90% of refund claims will now be sanctioned via a system-based risk assessment. Cash ledger refunds will now be fully automatic.
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The meeting also saw the expansion of Input Tax Credit relief, which will now be allowed on employee health and life insurance, telecom towers and pipelines outside factories as well as free samples and certain expired stock requiring destruction.
All proposals have essentially been accepted by the Council on Thursday and all decisions will be implemented by April 1.
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