'Faster decisions, lower compliance': PM Modi welcomes new GST reforms

Prime Minister Narendra Modi on Thursday welcomed the latest round of Goods and Services Tax (GST) reforms recommended by the GST Council, saying the measures would have a “very positive impact” on taxpayers and businesses.

In a post on X, Modi said the recommendations focused on removing arrest provisions, greater decriminalisation and simplifying GST procedures. "I welcome the new round of GST reforms approved by the GST Council,” Modi said.

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“The Council’s recommendations on removal of arrest provisions, greater decriminalisation and simpler procedures will have a very positive impact,” he added.

The Prime Minister further highlighted the broader objective of the reforms, writing: “The focus is clear: Faster decisions. Lower compliance.”

The comments came after the 57th meeting of the GST Council, chaired by Finance Minister Nirmala Sitharaman in New Delhi on Thursday. The Council retained the existing GST rate structure while recommending a series of changes aimed at making the tax system simpler and reducing compliance and litigation burdens.

GST arrest powers proposed to be removed

One of the major recommendations concerns enforcement powers under GST. The Council has proposed removing the power of GST officers to arrest taxpayers. At the same time, the threshold for launching prosecution has been raised from ₹1 crore to ₹5 crore.

The Council has also recommended removing the minimum punishment for GST offences. Courts would have discretion to decide whether a case warrants a fine, imprisonment or both.

The general penalty where no specific penalty is prescribed has also been reduced from ₹25,000 to ₹10,000.

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Faster refunds, simpler compliance

The reforms also seek to speed up GST refunds and registration processes. The acknowledgement period for refund applications has been reduced from 15 days to 10 days, while around 90% of eligible refund claims are expected to be processed automatically through risk-based assessment.

The Council has also proposed greater automation in GST registration and amendments. Low-risk applications are expected to receive automatic approval within three working days.

For smaller taxpayers, the Council has approved in principle an optional scheme under which businesses with turnover of up to ₹5 crore supplying only to consumers could file returns annually while paying tax quarterly.