New Delhi — As many of the GST reform measures came into effect from Sunday, the Confederation of Indian Industry (CII) said the GST Council's decisions on decriminalisation and rationalisation of enforcement powers are among the most significant institutional reforms in India's transition towards trust-based economic governance, The Hindu BusinessLine and ANI reported.

Source: The Hindu BusinessLine

Rs 5 croreNew prosecution threshold, up from Rs 1 crore
Rs 10,000No show-cause notice for tax dues below this amount
8 October 2026GST Council meeting that recommended the reforms

At its October 8 meeting, the GST Council recommended withdrawal of tax officials' arrest powers through the proposed omission of Section 69 of the CGST Act, a fivefold increase in the monetary threshold for prosecution from Rs 1 crore to Rs 5 crore, narrowing of specified offences under Section 132, rationalisation of imprisonment provisions with greater judicial discretion in sentencing, rationalisation of e-way bill interception and verification procedures, and no show-cause notice for tax dues below Rs 10,000.

Some of the measures need amendments in law. As an interim measure of trade facilitation, the Central Board of Indirect Taxes and Customs (CBIC) has instructed that, till the amendments are brought into effect, the reforms will be implemented by the field formations. CII also pointed to CBIC's October 26 circulars on registration, notices and adjudication, which require allegations of fraud to be substantiated with evidence, tax notices to carry greater clarity and adjudication to be reasoned.

"Reaching agreement on such fundamental changes is a substantial achievement of cooperative federalism. It demonstrates the willingness of the Centre and States to reconsider established regulatory practices in favour of greater trust in legitimate enterprise," CII Director General Chandrajit Banerjee said. "The importance of this reform is not simply that certain enforcement powers are being withdrawn. It is that the GST Council has recognised that effective tax administration need not depend on the threat of criminal sanctions," he said, calling it one of the most consequential steps towards trust-based governance in recent years.

Source: ANI

CII said the changes would help distinguish genuine commercial disputes and procedural lapses from deliberate fraud and evasion, while retaining criminal prosecution for serious violations — and that industry must reciprocate through stronger voluntary compliance, documentation and internal controls. For small traders and MSMEs, the practical meaning is fewer arrest and prosecution fears over smaller disputes, while deliberate fraud remains firmly in the criminal net.