GST Council may abolish arrest provisions, speed up refunds with 90% automatic payout
The 57th GST Council meeting scheduled for October 7 is expected to consider major changes to tax compliance under the Goods and Services Tax law. According to Finance Ministry sources, the council is likely to propose the complete removal of arrest provisions under GST, replacing them with civil consequences such as tax recovery, interest and penalties, while prosecution would continue for serious cases. The proposals also seek to raise the prosecution threshold from Rs 1 crore to Rs 5 crore.
A key reform addresses the refund process, particularly benefiting exporters. Under the proposal, 90 per cent of eligible refund claims would be released automatically after a risk check, with the remaining amount released after verification. Refund applications would be acknowledged within 10 days, and if an officer does not act within that period, the application would be treated as acknowledged. The system would leverage data from customs, the Reserve Bank of India and other sources to reduce document submission requirements. The refund framework would be widened to cover services and plant and machinery, with refunds on plant and machinery available over five years. Around 38,700 taxpayers currently claim export refunds and could benefit from these changes.
Additional compliance relief includes not issuing show-cause notices for amounts below Rs 10,000 under specified GST provisions. An expert committee has proposed removing nine offences entirely and softening 24 others, while the maximum sentence for middle category offences would be reduced from three years to two years.
