New Rules Being Prepared for Arrests in GST Cases

  • October 16, 2026
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The Central Government will work with states to prepare a Standard Operating Procedure (SOP) for handling existing arrest cases. In addition, the risk assessment process for GST refunds will be reviewed with states every three months.

The GST Council has recommended the removal of Section 69 of the Central Goods and Services Tax (CGST) Act, which provides for arrests in specified cases. It has also recommended increasing the monetary threshold for initiating prosecution from ₹1 crore to ₹5 crore.

These proposals are part of broader efforts to rationalise the criminal enforcement framework under GST and reduce litigation for businesses. Industry has welcomed the decision to decriminalise a large number of offences. However, it has also pointed out that the treatment of existing cases will be a key issue in implementing the new framework.

The GST Council has clarified that tax officers will no longer have the power to make arrests. However, coordination with states will be necessary to ensure consistency and uniformity in the handling of ongoing cases. Since the SOP is still under preparation, further discussions will be required.

The government is also planning to make the Invoice Management System (IMS) mandatory from April 1, 2027. The Central Board of Indirect Taxes and Customs (CBIC) is upgrading the system to make invoice matching fully digital, minimising the scope for human error.

The date of April 1, 2027, has been chosen because the proposed changes will require around a dozen amendments to existing rules and laws. Changes requiring amendments only to the rules may be implemented earlier, while some amendments may require parliamentary approval.

Following the announcement, the Central Government will focus on ensuring effective implementation of the rules at the ground level. Particular attention will be given to the decision to provide 90% refunds and Input Tax Credit (ITC) to businesses on the basis of risk assessment.

To ensure that the refund process remains consistent and responsive to requirements across different states and regions, the GST Council will review the risk assessment process for refunds with states every three months.