GST Arrest Powers May Be Scrapped: Major Tax Reform Proposal Set for October 7 Council Meeting
India’s Goods and Services Tax framework could be heading for one of its most significant enforcement changes since GST was introduced in 2017.
The GST Council is expected to consider a proposal on October 7 that could remove the power of GST authorities to directly arrest people for specified tax offences. The proposal is being discussed amid concerns from businesses about regulatory overreach and the use of arrest provisions during tax investigations.
However, taxpayers should not interpret the development as an immediate change in law. GST arrest powers remain in force as of October 4, 2026. The Council has yet to take a final decision, and any removal of the existing statutory provisions would require further legislative action.
What is being proposed?
According to reports, the Centre and states have been discussing the possibility of decriminalising parts of the GST enforcement framework for several months.
The proposal expected to come before the GST Council would remove specific arrest powers available to GST authorities under the existing law. If the Council supports the change, the Centre is expected to pursue amendments to the GST legislation, potentially during Parliament’s Winter Session.
The wider objective appears to be reducing fears of enforcement overreach while maintaining mechanisms to act against deliberate fraud.
This means the proposed reform should not be read as giving immunity to people involved in tax fraud or fake invoicing. Serious intentional wrongdoing could still face prosecution through the applicable legal framework even if the GST-specific arrest mechanism is changed.
What are the current GST arrest powers?
Under the current Central Goods and Services Tax Act, Section 69 gives the Commissioner authority, subject to statutory conditions, to authorise the arrest of a person believed to have committed specified offences covered under Section 132.
Those offences include certain serious cases involving tax evasion, fraudulent input tax credit and invoices issued without an underlying supply of goods or services. The law also lays down procedures governing arrest, bail and production before a magistrate.
CBIC’s existing arrest guidelines additionally state that authorities should consider factors including the nature of the offence, the person’s role and the available evidence before authorising an arrest.
Therefore, nothing has changed for taxpayers yet. The current provisions continue to apply unless and until the law is amended.
Why is the government considering a change?
The reported proposal follows concerns from sections of industry over the use of arrest powers during GST investigations.
According to The Indian Express, consultations between the Centre and states have taken place over roughly eight to nine months, with feedback from businesses forming part of the discussions.
Government data cited in reporting shows the scale of enforcement: between FY2021-22 and FY2024-25, central GST formations dealt with 72,393 GST offence cases and made 887 arrests. These figures do not include arrests by state GST authorities.
The debate is therefore not about ending action against tax evasion. Instead, the central question is whether GST officers themselves should retain arrest powers or whether serious criminal conduct should be handled through a different prosecution route.
October 7 GST Council meeting could be important for businesses
The 57th GST Council meeting is scheduled for October 7, 2026.
Finance Minister Nirmala Sitharaman had already indicated in September that the meeting would focus on GST process reforms, including issues involving e-invoicing and input tax credit rules.
Separate reporting now says the arrest-power proposal is expected to be considered at that meeting.
Other process reforms reportedly under consideration include changes related to registration, refunds, penalties and input tax credit procedures.
That makes the October 7 meeting particularly important for companies, traders and tax professionals.
Does this mean people can no longer be arrested for GST fraud?
No.
This is the most important point for taxpayers.
As of October 4:
The existing GST arrest provisions are still valid.
The GST Council has not yet approved their removal, Parliament has not passed an amendment removing them, and businesses must continue complying with the law as it currently stands.
Even if the proposal moves forward, intentional fraud and other criminal conduct would not simply become consequence-free. The legal route used against serious offenders could instead change.
What happens after the October 7 meeting?
The first major step will be the GST Council’s deliberation.
If the Council backs the proposal, legislative amendments would then be required before the existing arrest provisions could actually be removed. Reporting indicates that the government could seek those changes during the upcoming Winter Session of Parliament.
Until that process is completed, businesses should treat reports of the proposed reform as exactly that — a proposal, not a change already in force.
The October 7 meeting will therefore determine whether India moves ahead with a major shift in GST enforcement or whether the current arrest framework continues in its existing or a modified form.