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One free scan finds every outdated or missing driver and matches the right update for your exact hardware.Free scan · exact hardware matchThe GST Council’s 49th-meeting record did not declare GST offences broadly decriminalised. It records agreement to raise the prosecution threshold from ₹1 crore to ₹2 crore for most offences, while retaining the ₹1 crore threshold for issuing fake invoices. The same agenda considered changes to which conduct could be prosecuted and to compounding amounts. These are Council recommendations and decisions, not proof by themselves that the CGST Act was amended or that a change took effect.
What “GST 2.0” means in this discussion
Here, “GST 2.0” refers narrowly to proposals to recalibrate prosecution and compounding under India’s Central Goods and Services Tax Act, 2017 (CGST Act). It does not refer to GST rate changes or a complete redesign of the tax system.
The GST Council’s 49th-meeting agenda says its Law Committee examined prosecution and compounding provisions to rationalise the law, address ambiguity and make compounding more attractive. The record must be read as a policy decision, not as the operative statute: confirming a legal change requires checking the relevant amendment and its commencement date.
What the Council recommended and decided
Prosecution threshold: ₹2 crore for most offences, with a fake-invoice exception
The agenda records the Council’s agreement to increase the prosecution threshold from ₹1 crore to ₹2 crore for all offences other than issuing fake invoices. The record states: “The Council agreed with the recommendation of the Law Committee in agenda item 7(iii) with modification that the threshold for prosecution be increased to Rs 2 crore from Rs 1 crore for all offences, other than the offence pertaining to issuance of fake invoices.” GST Council 49th-meeting agenda and minutes.
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That exception matters: the decision record retains a ₹1 crore threshold for the offence of issuing fake invoices. It is inaccurate to summarize the decision as removing criminal consequences for fake invoicing or for GST offences generally.
Proposed changes to the offences covered
The Law Committee recommended excluding offences under section 132(1)(g), (j) and (k) from prosecution under the CGST Act, noting that the conduct was also punishable under the Indian Penal Code. This was a committee recommendation recorded in the Council agenda; it should not be described as an enacted exclusion without confirming the subsequent law.
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Proposed compounding range
The agenda records a recommendation to reduce the compounding range from 50%–150% to 25%–100% of the tax amount. The Council discussion and this recommendation do not establish which range is currently operative. The statute’s retrieved text and the Council proposal differ, so readers should check an up-to-date consolidated Act and the amendment’s commencement before relying on a figure.
Why the decision was contested
Some state representatives objected that a higher threshold could weaken deterrence, particularly in bill-trading and fake-invoice cases. The agenda records the Tamil Nadu representative citing 471 cases below ₹1 crore with a stated revenue implication of ₹222 crore, compared with 241 cases and ₹350 crore if the threshold were raised to ₹2 crore. Those are figures attributed to that representative in the Council record, not independently audited national statistics.
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How criminal offences and compounding work under the CGST Act
Section 132: conduct that can attract criminal punishment
Section 132 enumerates offences and punishment tiers linked to the amount of tax evaded, input tax credit wrongly availed or used, or refund wrongly taken. The CBIC-hosted Act text lists conduct including:
- Supplying goods or services without an invoice with intent to evade tax.
- Issuing invoices without an actual supply where that leads to wrongful input tax credit or refund.
- Fraudulent input-tax-credit conduct and fraudulent tax evasion.
- Collecting tax and failing to remit it to the government.
- Falsifying records, obstructing an officer, or dealing with goods known or believed to be liable to confiscation.
- Tampering with evidence and certain failures to provide, or false statements in, required information.
The same text provides for prior sanction by the Commissioner before prosecution. For the statutory wording, see the CBIC-hosted CGST Act.
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Section 138: compounding is a separate route
Compounding allows an eligible offence to be settled by paying a prescribed amount, either before or after prosecution, subject to statutory exclusions and payment of tax, interest and penalty. It is not the same as a finding that no offence occurred, and it does not apply to every case.
The CBIC-hosted Act text retrieved for this article states a minimum compounding amount of ₹10,000 or 50% of the tax involved, whichever is higher, and a maximum of ₹30,000 or 150% of the tax, whichever is higher. Because the Council agenda records a proposal for a lower percentage range, check the latest law and commencement details rather than assuming either figure applies today. CGST Act text hosted by CBIC.
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Do not confuse the Council threshold with CBIC’s ₹5 crore guidance
CBIC Instruction 04/2022-23, dated 1 September 2022, says prosecution should normally be launched in section 132 cases where tax evasion, input-tax-credit misuse or fraudulent refund exceeds ₹5 crore. It also identifies exceptions, including habitual evaders and specified arrest-related circumstances. This is administrative prosecution guidance; it is distinct from both the statutory text and the Council’s recorded ₹2 crore decision. The figures describe different instruments and should not be treated as interchangeable. See CBIC Instruction 04/2022-23.
What decriminalisation could mean for taxpayers
The policy question is how to distinguish serious, deliberate fraud from less serious or technical defaults, while preserving deterrence for conduct such as fake invoicing and bill trading. A higher prosecution threshold can narrow the cases considered for criminal prosecution, but it does not, by itself, erase tax liability, interest, penalties, adjudication or other consequences under GST law.
To understand a particular case, separate these questions:
- Conduct and intent: Is the allegation a procedural lapse, obstruction, fake invoicing or deliberate fraud?
- Legal instrument: Is the relevant figure in the Act, a Council decision record or CBIC administrative guidance?
- Amount and offence: What amount is involved, and does the fake-invoice exception apply?
- Possible outcome: Is the issue about prosecution, monetary penalty, compounding or more than one of these?
- Procedure and timing: Has prosecution received the required sanction, and what law was in force on the relevant date?
Keep direct-tax proposals separate from GST
NITI Aayog’s 2025 working paper, Towards India’s Tax Transformation: Decriminalisation and Trust-Based Governance, examines criminal provisions in the Income-tax Act, 2025, not GST. Its recommendations and offence counts therefore do not establish what has changed or should change under the CGST Act. The paper’s scope is identified in the NITI Aayog working paper.
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How to verify the rule for a specific tax period
- Identify the offence, tax amount and relevant tax period; determine whether the allegation concerns issuing fake invoices.
- Read the applicable version of sections 132 and 138 in the consolidated CGST Act, rather than relying solely on a meeting agenda or summary.
- Check the amending Act and Gazette commencement notification for the specific provision. A Council decision alone does not establish the amendment’s effective date.
- Read the applicable CBIC prosecution instruction separately from the statute, and check whether its stated exceptions apply.
- For a live dispute, have a GST professional or lawyer review the notices, dates and procedural record; the general policy account here is not case-specific legal advice.
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