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At its 57th meeting on 8 October 2026, the GST Council recommended changes that would remove arrest powers under the CGST Act, revise prosecution and penalty rules, cap certain appeal pre-deposits, and narrow when goods in transit can be intercepted. These are recommendations for legal amendments—not proof that the changes are already in force. Businesses should check the enacted law and commencement dates before relying on them.
What is the legal status of the proposals?
The Council met in New Delhi under Union Finance Minister Nirmala Sitharaman’s chairpersonship. The Ministry of Finance’s official release on the 57th meeting records recommendations for amendments to GST law. It does not establish that each amendment has been enacted or commenced, and it gives no implementation schedule for every proposal. Until the relevant legal changes take effect, taxpayers should not treat the recommendations as operative law.
The recommendations focus on enforcement and process, rather than tax rates: the Council said it made no GST rate changes at this meeting. Its wider process proposals also cover registration, returns, refunds, adjudication and trade facilitation.
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One free scan finds every outdated or missing driver and matches the right update for your exact hardware.Free scan · exact hardware matchWhat would change for arrest and prosecution?
Arrest powers
The Council recommended withdrawing GST arrest powers by omitting section 69 of the CGST Act, 2017. This proposal concerns arrest authority; it should not be read as eliminating every GST enforcement power or as automatically ending prosecution.
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Prosecution threshold and offences
The Council recommended raising the monetary threshold for prosecution from ₹1 crore to ₹5 crore and changing offences and punishments under section 132. The proposed section 132 revisions include omitting one offence clause, deleting specified language from other clauses, limiting one input-tax-credit-related offence to fraudulent availment without receipt of goods or services, or without an invoice or bill, and rationalising punishments. The release does not set out enough detail to treat every existing offence or punishment as removed; the final amended text will matter.
How would penalties and show-cause notices change?
General penalty ceiling
For the general penalty provision in section 125, the Council recommended lowering the maximum from ₹25,000 to ₹10,000. This is a proposed ceiling for that provision—not a universal limit on every GST penalty. Other penalty provisions and the specific case involved still matter.
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Threshold for specified notices
The Council recommended that show-cause notices under sections 73, 74 and 74A not be issued below ₹10,000, aggregating CGST, SGST, IGST and cess. It also recommended treating pending notices and appeals below that threshold as if the threshold had applied when the notice was issued, once the provision comes into force. This proposal is separate from the section 125 general-penalty ceiling.
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Reduced penalty in certain non-fraud cases
In non-fraud cases, the Council recommended a 5% penalty if the taxpayer pays the tax and interest within 30 days after the adjudication order under section 73, or within 60 days under section 74A. It separately recommended removing the minimum ₹10,000 penalty condition for non-fraud cases. The 5% proposal is tied to the specified case type and payment window; it is not a general rate for all GST penalties or stages of a dispute.
Another distinct recommendation would deem the penalty amount a “charge” where the full tax, interest and penalty are voluntarily paid within the specified time limit. The release does not provide a basis for treating that proposal as interchangeable with the 5% rule.
Who could benefit from the proposed appeal pre-deposit cap?
For an appeal before the Appellate Authority or Appellate Tribunal, the Council recommended a maximum pre-deposit of ₹40 crore where the order involves only a penalty and no tax demand. The proposed cap is divided into ₹20 crore for CGST and ₹20 crore for SGST or UTGST.
The limitation to penalty-only orders is material: the recommendation does not describe a general cap for appeals that also involve a tax demand. Businesses assessing an appeal should verify the final statutory wording and the applicable commencement date.
When could goods in transit still be intercepted?
For proposed amendments to sections 68, 129 and 130, the Council recommended restricting interception of a vehicle carrying goods to cases involving specific intelligence and authorisation from an officer at or above Joint Commissioner rank. It also recommended allowing inspection and further detention or seizure when the supplier or recipient is located or registered in the state where the vehicle is intercepted, rather than in a state through which it is merely passing.
Exceptions in the recommendation
The release identifies circumstances in which inspection, detention or seizure could occur irrespective of jurisdiction:
- No e-way bill has been generated.
- The vehicle lacks documents showing the origin or destination of the goods.
The Council also recommended that confiscation under section 130 not apply to goods or conveyances in transit. These are proposed limits with stated exceptions; they do not amount to a blanket removal of all inspection or seizure powers.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What other process safeguards did the Council recommend?
Objections to blocked electronic credit
The Council recommended a revised rule 86A process under which a taxpayer could object to an amount blocked in the electronic credit ledger and receive a personal hearing before the proper officer decides the objection.
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The Council also recommended standardised guidance for demand notices and adjudication and appeal orders, with attention to notice quality, timeliness, proper invocation of fraud or suppression grounds, and natural justice, including personal hearings. It proposed faster, more automated processing for certain refunds. These recommendations do not mean that every taxpayer automatically qualifies for a refund or that officer interactions would disappear.
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What should taxpayers and businesses check before acting?
- Confirm whether an amendment has been enacted and when it commences; a Council recommendation by itself does not change the operative law.
- For a notice or penalty, identify the relevant statutory section, whether the case is treated as fraud or non-fraud, the tax and interest involved, and any payment deadline in the final law.
- For an appeal, establish whether the order is penalty-only or also includes a tax demand before applying the proposed pre-deposit treatment.
- For a transport interception, check the documents carried with the goods and the final rules on intelligence, authorisation, jurisdiction and exceptions.
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