Stories
GST Council to Remove Arrest Provisions, Speed Up Refunds, Decriminalize Offences
- •The 57th GST Council meeting on October 7 will consider major compliance reforms, including removing arrest provisions and widening input tax credit.
- •Safeguards built into the law in 2017 can now be relaxed as the system is more effective at detecting irregularities, allowing for disputes to be addressed through recovery of tax, interest, and penalties.
- •The prosecution threshold is likely to be raised from Rs 1 crore to Rs 5 crore, with nine offences expected to be fully decriminalized and penalties eased for 24 offences.
- •Honest buyers will receive relief, allowing them to retain input tax credit even if a supplier defaults, with recovery proceedings directed against the defaulter.
- •Input tax credit is likely to be extended to several categories, and refunds on services and plant and machinery will be eligible, with claims acknowledged within 10 days and 90% released automatically.
Key Questions Answered
The 57th GST Council meeting is expected to consider removing arrest provisions under the tax regime, raising the prosecution threshold from Rs 1 crore to Rs 5 crore, and fully decriminalising nine offences while easing penalties for 24 others.
Honest buyers holding valid invoices who paid suppliers will be allowed to retain input tax credit even if a supplier further up the chain defaults, with recovery proceedings directed against the defaulter. Additionally, input tax credit is likely to be extended to several categories including vehicles with seating capacity of up to 13 people, health and life insurance, and telecom towers.
Tax paid on services and plant and machinery is likely to become eligible for refunds, with machinery refunds spread over five years, and 90 percent of verified claims expected to be released automatically following risk assessment. Furthermore, no show-cause notices will be issued for amounts below Rs 10,000, extending relief to pending cases.
