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The 57th GST Council meeting on 8 October 2026 recommended two changes that matter most to taxpayers: raising the monetary threshold for prosecution under the CGST Act from ₹1 crore to ₹5 crore, and cutting the maximum general penalty under section 125 from ₹25,000 to ₹10,000. These are recommendations for statutory amendments. The Ministry of Finance’s Press Information Bureau (PIB) release of 8 October 2026 does not give an effective date, and it does not say either change has come into force.
What the Council actually recommended
The recommendations were announced in a PIB release titled “Recommendations of the 57th Meeting of the GST Council,” posted on 8 October 2026. The meeting was held in New Delhi and chaired by Union Finance and Corporate Affairs Minister Nirmala Sitharaman. The Council’s role is to make recommendations; Parliament or the relevant government notification process must carry them into law before they operate as rules. Any headline that says the rules have “changed” therefore runs ahead of the evidence.
Prosecution threshold: ₹1 crore to ₹5 crore
Under the release, the Council recommended raising the monetary threshold for prosecution from ₹1 crore to ₹5 crore. In the release’s words, the monetary threshold for prosecution is “to be raised from ₹1 crore to ₹5 crore.” If the recommendation is adopted as written, the amount of tax evasion or fraud needed before a prosecution can be launched would rise from ₹1 crore to ₹5 crore. Until an amendment takes effect, the ₹1 crore figure remains the reference point for the current position.
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- Omission of clause (i) of section 132(1).
- Deletion of the words “evades tax” in clause (e).
- Deletion of the words “or in any other manner deals with” in clause (h).
- Amendment of clause (c) so that it covers fraudulent availment of input tax credit without receipt of goods or services, or without an invoice or bill.
- Rationalisation of punishment amounts for offences under section 132.
These are the release’s descriptions of the recommendations. They are not the final drafting of the amended statute, so the wording that eventually becomes law may differ. Readers who need the precise text should wait for the enacted provision.
General penalty under section 125: ₹25,000 to ₹10,000
The Council also recommended reducing the maximum general penalty under section 125 of the CGST Act from ₹25,000 to ₹10,000. Section 125 is the general penalty provision, used where no specific penalty is prescribed elsewhere in the Act. The cap is a ceiling; it does not mean every general-penalty case will now attract ₹10,000.
The ₹10,000 figure appears in several other proposals in the same release. These are separate measures, and they should not be read as part of the section 125 change:
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- Non-fraud cases: reduced-penalty proposals for certain non-fraud cases, and removal of the minimum penalty in non-fraud cases.
Other recommendations in the same package
The release also reports recommendations on arrest provisions and on pre-deposits for appeals where an order involves only a penalty and no tax demand. For those appeals, the proposal sets an upper limit of ₹40 crore for specified pre-deposits, made up of ₹20 crore under the CGST Act and ₹20 crore under the SGST/UTGST Act. The release gives no further detail on the arrest recommendations in the text summarised here, so this article does not describe them beyond noting that they are part of the package.
Recommendation versus law: what is and is not established
| Item | Position in the PIB release | Status | Effective date |
|---|---|---|---|
| Prosecution monetary threshold (section 132) | ₹1 crore raised to ₹5 crore | Recommended | Not stated in the release |
| Maximum general penalty (section 125) | ₹25,000 reduced to ₹10,000 | Recommended | Not stated in the release |
| Show-cause notice minimum (sections 73, 74, 74A) | ₹10,000 minimum threshold | Recommended | Not stated in the release |
| Pre-deposit cap for penalty-only appeals | Upper limit of ₹40 crore (₹20 crore CGST, ₹20 crore SGST/UTGST) | Recommended | Not stated in the release |
The release does not say how cases already pending before any change would be treated for prosecution or for section 125 penalties. That treatment is not established by the announcement, and readers with live matters should not assume either way.
What to check before acting
- Look for an amending Act or a notification issued by the government that gives the amendments legal effect.
- Check the commencement clause in that amendment. A change can be enacted and still take effect on a later date, or on a date set by notification.
- Check the transitional provisions for any case that began before the change takes effect.
- Confirm the final wording of section 132(1) and section 125 in the amended Act, not in the summary of the Council’s recommendations.
What this means for taxpayers today
- A higher prosecution threshold would reduce criminal exposure for smaller amounts, but only once it is in force.
- A lower general-penalty cap would matter for cases that fall under section 125, but the ₹10,000 show-cause threshold and the non-fraud penalty changes are separate measures.
- Until a notification or amending Act confirms commencement, existing rules and any pending proceedings should be handled on the basis of the law as it stands.
Taxpayers facing a specific notice or proceeding should get advice from a qualified GST professional who can read the notice against the law in force on the date it was issued.
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