57th GST Council recommends withdrawing arrest powers, ₹5 crore prosecution threshold and faster refunds

The GST Council, at its 57th meeting held in New Delhi on 8 October 2026, recommended a set of process and compliance reforms. These recommendations take effect only through circulars, notifications and law amendments.

Key recommendations

• Arrest and prosecution: arrest powers to be withdrawn by omitting section 69 of the CGST Act, 2017. The monetary threshold for prosecution to rise from ₹1 crore to ₹5 crore.
• Notices and penalties: a minimum threshold of ₹10,000 for issuing show cause notices under sections 73, 74 and 74A. A reduced penalty of 5% in non-fraud cases where tax and interest are paid within 30 days (section 73) or 60 days (section 74A) of the order. The maximum general penalty under section 125 to fall from ₹25,000 to ₹10,000.
• Appeals: pre-deposit capped at ₹40 crore where the order involves only penalty.
• Refunds: 90% of zero-rated and inverted duty refund claims to be sanctioned provisionally by the system. The time for an acknowledgement or deficiency memo to fall from 15 to 10 days.
• Late fee: late fee under section 39(1) to be waived for taxpayers with turnover up to ₹5 crore if the delayed return is filed by the end of the month in which it was due.
• Returns: a revised mechanism to reconcile GSTR-1, GSTR-3B and GSTR-2B, proposed from the April 2027 return after public consultation.

What businesses should do now

No change applies yet. Follow current provisions and track CBIC notifications and circulars that implement these recommendations.