GST Council goes for structural change : becomes more tax friendly for small scale

Pabitra Banerjee : In a landmark shift toward trust-based taxation, the GST Council has officially approved sweeping compliance reforms that strip tax authorities of direct arrest powers and raise the threshold for launching criminal prosecution fivefold to five crore rupees.
Announced following the 57th meeting of the Council chaired by Finance Minister Nirmala Sitharaman, the major structural overhaul marks a decisive departure from legacy enforcement mechanisms. Under the revised framework, tax officials will no longer possess the authority to detain individuals, with criminal proceedings now restricted exclusively to high-value cases exceeding the enhanced five-crore-rupee limit. To further alleviate compliance friction, the Council slashed the general penalty for unspecified infractions down to ten thousand rupees from the previous twenty-five-thousand-rupee ceiling.
The structural changes are designed to fundamentally reduce corporate litigation and administrative harassment, allowing tax authorities to lean on civil financial remedies such as recovery, interest, and proportionate penalties rather than punitive custody. Additionally, the Council introduced simplified registration norms for small-scale e-commerce vendors and established a dedicated committee of officers to resolve long-standing input tax credit disputes for genuine buyers.
With the existing tax rate structure declared stable, the government announced that future slab and rate adjustments will be consolidated into a single dedicated annual review. These comprehensive next-generation process reforms are slated to officially take effect starting April 1, 2027, ushering in a more predictable and business-friendly indirect taxation regime nationwide.