General information, not professional advice. GST rules, rates and due dates change by notification. Check the current position on the GST Portal or with your CA before you act on anything here.
Status on 13 October 2026: recommended, not in force. Everything on this page is a recommendation of the GST Council. A recommendation becomes law only when the Act or the Rules are amended, or a notification or circular is issued. Until then the existing rules apply to your bills, returns and e-way bills.
The short version
- The Council recommended withdrawing arrest powers under GST by omitting section 69 of the CGST Act.
- Prosecution would start only above ₹5 crore, up from ₹1 crore, and for a shorter list of offences.
- No show cause notice where the tax involved is below ₹10,000, counted across CGST, SGST, IGST and cess together.
- The general penalty would fall from ₹25,000 to ₹10,000, with a reduced 5% penalty for paying soon after an order in non-fraud cases.
- All of these are amendments to the Act. They are not in force, and the tax, interest and late fee you owe today are unchanged.
Arrest and prosecution
The Council recommended the complete withdrawal of arrest powers under GST, by omitting section 69 of the CGST Act. The FAQs put it plainly: once amended, no person would be arrested for an offence under GST law. Prosecution before a court would remain, on a complaint by the tax authorities.
| Point | Proposed |
|---|---|
| Arrest | Section 69 omitted, so no arrest under GST law |
| Threshold for prosecution | ₹5 crore, up from ₹1 crore |
| Above ₹5 crore, up to ₹10 crore | Imprisonment up to two years, or fine, or both |
| Above ₹10 crore | Imprisonment up to five years, or fine, or both |
| Minimum six months' imprisonment | Removed, so a court may impose a fine alone |
The ₹1 crore figure for today's threshold is the one the press release uses. The proposed punishment figures are from the FAQs issued with the recommendations. The list of offences in section 132(1) would also be narrowed, including: clause (i) omitted, the words "evades tax" removed from clause (e), and clause (c) limited to fraudulently taking credit without receiving goods or services, or without an invoice or bill.
This is aimed at fraud. It does not make tax optional: the tax, interest and penalty on a genuine shortfall are recovered as before.
The ₹10,000 notice threshold
The Council recommended amending sections 73, 74 and 74A so that no show cause notice is issued where the tax involved is less than ₹10,000. From the FAQs:
- The ₹10,000 is the total across CGST, SGST or UTGST, IGST and cess. Each head does not have to cross it separately.
- Interest, late fee and penalty are not counted towards it.
- Exactly ₹10,000 meets the threshold, so a notice can be issued.
- Wrongly availed or utilised input tax credit counts as tax for this purpose.
The Council also recommended that notices and appeals below ₹10,000 that are pending when the provision starts be decided as if the threshold had applied when the notice was issued.
Penalties
- General penalty: the maximum under section 125 of the CGST Act, which applies where no specific penalty is prescribed, would fall from ₹25,000 to ₹10,000.
- Pay soon, pay less: in non-fraud cases, a reduced penalty of 5% where the tax and interest are paid within 30 days of the adjudication order under section 73, or 60 days under section 74A.
- No ₹10,000 floor: the minimum penalty of ₹10,000 in non-fraud cases would be removed.
- "Charge", not "penalty": where the full tax is paid voluntarily with interest and penalty within the time allowed, the penalty amount would be deemed a charge. The FAQs confirm the amount payable does not change.
How the three separate costs of a delay are worked out today is in GST late fees, interest and penalties.
Late fee and small businesses
Late fee waiver. For taxpayers with annual turnover up to ₹5 crore in the preceding financial year, the Council recommended waiving the late fee on a delayed return under section 39(1) if it is filed by the end of the month in which it was due. Interest on tax paid late is a separate matter and is not part of this recommendation. See GST return due dates.
ARQP. The Council approved, in principle, a concept note for an optional Annual Return Quarterly Payment scheme for taxpayers with turnover up to ₹5 crore in the preceding year who supply only to unregistered persons. It is a concept note: no form, procedure or start date has been announced, and the release does not say how it will sit beside the existing composition scheme.
Appeals and other items
- Pre-deposit cap: where an order involves only penalty and no tax, the pre-deposit for an appeal would be capped at ₹40 crore, that is ₹20 crore under CGST and ₹20 crore under SGST or UTGST.
- Blocked credit ledger: rule 86A would be amended so a taxpayer can object to the blocking of credit in the electronic credit ledger and get a personal hearing before a decision.
- Better notices: a circular with guidelines for officers on the quality and timing of demand notices and orders, on invoking fraud only on the merits of each case, and on personal hearings.
- One that cuts the other way: a validation clause for notices that courts have held invalid because they covered more than one financial year.
What to do now
- Reply to any notice you hold, on time. A small pending demand may later be decided under the new threshold, but only once the provision exists.
- File on time anyway. The late fee waiver is a recommendation, and it would not cover interest.
- Keep GSTR-1 and GSTR-3B in agreement. Many small demands start as a mismatch between the two.
- Ask your CA before relying on any of this in a reply or an appeal.
Sources
- Ministry of Finance press release, Recommendations of the 57th Meeting of the GST Council, 8 October 2026 (PIB release ID 2320934)
- The same release on the GST Council website (PDF)
- The FAQs issued with the recommendations in October 2026
We will update this page when the notifications, circulars and amendments are issued. To hear when they are, follow the AawazAI WhatsApp channel.
Fewer mistakes for a notice to find
AawazAI checks the GSTIN, place of supply and tax on every bill as you make it, and keeps the books your CA's return is built from. Your CA files, the app never does.
Frequently asked questions
Has the arrest provision under GST been removed?
Not yet. On 8 October 2026 the GST Council recommended omitting section 69 of the CGST Act, which contains the power of arrest. It takes effect only when the Act is amended and the amendment is brought into force.
What is the new prosecution limit under GST?
The Council recommended raising the monetary threshold for prosecution from ₹1 crore to ₹5 crore. According to the FAQs, the proposed punishment is up to two years, or fine, or both between ₹5 crore and ₹10 crore, and up to five years, or fine, or both above ₹10 crore.
Will I get a GST notice for a demand below ₹10,000?
Under the proposal, no show cause notice under sections 73, 74 or 74A would be issued where the tax involved is below ₹10,000, counted across all tax heads and cess together and excluding interest, late fee and penalty. It is not in force yet.
Is the GST late fee waived for small businesses?
The Council recommended a waiver for taxpayers with turnover up to ₹5 crore in the preceding year, where the delayed return under section 39(1) is filed by the end of the month in which it was due. It needs a notification before it applies.
What is the general penalty under GST now?
Today the maximum general penalty under section 125 is ₹25,000. The Council recommended reducing it to ₹10,000. Until the Act is amended, ₹25,000 remains the maximum.