NEW DELHI: In a major overhaul of the GST regime, the GST Council on Thursday approved a series of taxpayer-friendly reforms aimed at easing compliance, reducing litigation and building a trust-based tax system.
The decisions were taken at the 57th meeting of the Council chaired by Union Finance Minister Nirmala Sitharaman.
*Key Highlights of GST 2.0 Reforms:*
*1. No Arrest Powers, Higher Prosecution Threshold:*
In a significant relief to businesses, the Council has decided to withdraw the powers of GST officers to arrest taxpayers at the investigation stage. The threshold for launching criminal prosecution has been raised to Rs 5 crore, aimed at preventing disproportionate enforcement action.
Tax authorities will continue to retain powers to assess liability and recover tax dues, interest and penalties as per law.
*2. Faster GST Refunds in 3 Days:*
To improve cash flow for businesses, the refund mechanism will be fast-tracked. The period for acknowledging refund applications has been reduced from 15 days to 10 days. If no acknowledgement or deficiency memo is issued within 10 days, the application will be deemed acknowledged.
Based on risk assessment, around 90 percent of refund claims are expected to be sanctioned within three working days of acknowledgement.
*3. Rationalisation of Notices and Penalties:*
The Council has approved a Rs 10,000 threshold for issuance of GST notices. The general penalty has been reduced from Rs 25,000 to Rs 10,000, along with measures to simplify scrutiny procedures.
*4. Big Relief for Small Businesses and Online Sellers:*
In a boost to e-commerce, GST registration has been simplified for small suppliers selling through online platforms. An optional compliance scheme has also been proposed for businesses with annual turnover up to Rs 5 crore supplying only to consumers (B2C). Under the scheme, eligible taxpayers will file one annual return while paying tax quarterly. Detailed framework will be taken up in the next meeting.
*5. Relief in Transportation of Goods:*
To end harassment on highways, vehicles carrying goods can now be stopped only on specific intelligence and with prior authorisation of an officer not below Joint Commissioner rank. Inspection will be restricted to origin and destination states only, and transit states cannot routinely stop consignments. The move is expected to significantly improve logistics efficiency.
*6. Input Tax Credit Relaxations:*
The Council has recommended ITC on health and life insurance bought for employees, telecom towers, pipelines laid outside factory premises, and on free samples and expired stock that is required to be destroyed under law. The provisions will be subject to statutory changes.
*7. Centralised Administration:*
CBIC is working on a centralised assessment system for around 2 lakh taxpayers operating across multiple GST jurisdictions, providing a single window for all GST functions and reducing the need to deal with multiple offices.
Finance Minister Nirmala Sitharaman said the reforms reflect the government's commitment to a transparent, efficient and taxpayer-friendly system.
The process-related changes will come into effect from April 1, 2027 after necessary legislative and administrative amendments.