The 57th GST Council meeting on October 8 decided on no broad rate changes but on removing arrest powers, raising the prosecution threshold from Rs 1 crore to Rs 5 crore and widening input tax credit, with most changes needing amendments before they take effect.

The headline change is about enforcement. Section 69, the power of arrest, would be omitted, and the prosecution threshold under Section 132 would rise fivefold.

The second theme is relief for compliance. The general penalty falls from Rs 25,000 to Rs 10,000, notices below Rs 10,000 would not be issued, and a 5% penalty applies in non-fraud cases if tax and interest are paid within the time limit.

The third is credit. Restrictions would be removed on credit for items such as health and life insurance, telecom towers and pipelines, and credit on input services becomes refundable from November 1, 2026 under the inverted duty structure.

A Council decision is a recommendation, and the framework is expected to become operational from April 1, 2027 after amendments, according to Whalesbook.

A minimum Rs 10,000 threshold would apply for show-cause notices under Sections 73, 74 and 74A.

Pending cases below that amount would be decided as if the threshold applied from the start.

Pre-deposit for appeals against penalty alone would be capped at Rs 40 crore.

Vehicles can be stopped for inspection only on specific intelligence, authorised by an officer of Joint Commissioner rank or above, according to Whalesbook.

Inspection and seizure would be limited to the supplier’s or recipient’s state, with no interception in transit states, according to TaxO.

Restrictions on input tax credit under Section 17(5) would be removed for outdoor catering, health and life insurance, telecom towers, pipelines laid outside factories, free samples, and goods destroyed or written off on expiry.

Most registration amendments would be auto-accepted, except changes to the principal place of business for taxpayers who are not low risk.

Government buildings, New Delhi (file image), Wikimedia Commons, Free Art License