GST Council to Decriminalize Tax Laws in GST 2.0 Reforms

The GST Council is scheduled to meet on October 7 in New Delhi to deliberate a sweeping rewrite of enforcement laws under the 'GST 2.0' or 'Next-Gen GST' initiative. A central proposal involves removing the standalone power of tax officials to authorize arrests under Section 69 of the Central GST Act, requiring judicial authorization for any future arrests instead. The Council will also consider raising the monetary threshold for initiating criminal prosecutions, with proposals ranging from an increase to Rs 5 crore or Rs 10 crore.

These reforms shift enforcement from arrest-led deterrence toward technology-driven detection and civil liability. For serious crimes like fake invoicing, the Council suggests utilizing the general criminal law provisions of the Bharatiya Nyaya Sanhita rather than standalone GST provisions. Additional measures include reducing imprisonment timelines, removing minimum sentence requirements, and barring GST notices for tax demands below Rs 10,000 to reduce low-value litigation.

Operational reforms aim to ease the burden on small and medium enterprises. Proposals include a 'deemed acknowledgement' system for refunds and registrations within 10 days, allowing e-commerce sellers to use platform warehouses as registered places of business, and implementing intelligence-led logistics checks to reduce vehicle stoppages at state borders. The Central Board of Indirect Taxes and Customs is also developing a faceless system for audit and adjudication. These changes follow a period of growth, with gross GST collections reaching Rs 12.46 trillion between April and September 2026.