India’s proposed GST decriminalisation package could narrow criminal enforcement and reduce low-value disputes, but the changes have not been established as law. A Financial Express report published October 5, 2026, attributed the proposals to government sources and quoted tax experts on their expected effect; it did not report a final GST Council decision, a legal amendment, or a commencement date. Treat the figures below as reported proposals, not rules currently in force. Read the Financial Express report.
What GST decriminalisation changes were reported?
According to government sources cited by Financial Express, the proposed package would change which GST offences attract criminal consequences and adjust prosecution thresholds and penalties. The report did not name the individual offences in each category, so it does not establish that every GST offence—or every arrest power—would be removed.
| Area | Current framework as described in the report | Reported proposal |
|---|---|---|
| Offence treatment | The report describes criminal enforcement for specified offences, including fake invoicing and fraudulent availment or utilisation of input tax credit. | Government sources said ten offences would be taken out of criminal law, 24 softened and eleven retained. The report does not identify which offences fall into each group. |
| Prosecution threshold | The report gives the existing threshold as Rs 1 crore. | Government sources said it would rise to Rs 5 crore. |
| Sentencing | The report describes a maximum sentence of three years in the middle band and a minimum sentence. | Government sources said the minimum sentence would be removed and the middle-band maximum reduced from three years to two. |
| Small amounts and notices | The report does not specify a general current no-notice threshold. | Government sources said the GST Council may approve no notice where the amount at stake is below Rs 10,000. This was described as a possible Council decision, not an implemented rule. |
All figures in the proposal column are as reported by Financial Express from government sources on October 5, 2026; they are not confirmed operative law.
Would GST arrest powers be removed?
The report describes the current framework as allowing arrest for specified offences such as fake invoicing and fraudulent input tax credit claims. It does not say that all arrest provisions would disappear. Rather, it reports that ten offences would leave criminal law, 24 would be softened and eleven retained, without listing them.
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Pranshu G, a partner at Ashok Pranshu & Co., said that certain Section 132 offences involving tax evasion above Rs 5 crore gave the Commissioner power to arrest. That is his account as quoted in the report, not an independent confirmation here of the legal scope of that power or of how the proposal would affect it.
The report also mentions the February arrest by the Directorate General of GST Intelligence of Rishi Gupta, then managing director and CEO of Fino Payments Bank. It says the investigation related to the bank’s business partners, not GST compliance by the bank itself. The example illustrates why the boundary between an investigation and a taxpayer’s own liability matters; it does not establish that the proposed changes would alter the outcome of that case.
How could the proposals affect litigation and certainty?
The package combines potential changes to criminal enforcement with a possible procedural filter for small amounts. In principle, fewer offences carrying criminal consequences could make the line between tax disputes and criminal cases clearer. A higher prosecution threshold could also reserve prosecution for cases above a larger reported amount. The possible no-notice threshold could keep some low-value matters out of the notice process. These are anticipated effects, not measured results or confirmed policy outcomes.
Manoj Mishra, partner and tax controversy management leader at Grant Thornton Bharat, said the proposed shift was about drawing a clearer institutional boundary between deciding tax liability and criminal enforcement—not merely removing an arrest provision. That distinction matters to businesses: a tax demand is resolved through adjudication of liability, while criminal enforcement addresses alleged offences. A proposal affecting one does not automatically cancel the other.
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Have the proposed GST changes taken effect?
The October 5, 2026 report does not establish that the GST Council adopted the package, that legislation or a notification followed, or that any provision has commenced. It provides no effective date. Do not rely on the reported thresholds or offence counts to respond to a notice, investigation, or prosecution unless an authoritative decision and operative legal text confirm the relevant change.
To establish the current position, check for an official GST Council decision and the subsequent legislation, notification, or other operative legal text, including its effective date. If you have an active GST notice or criminal investigation, consult a qualified Indian tax or legal professional about the law that applies to your case.
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