Karnataka CM DK Shivakumar praised the GST Council for accepting the state's proposal to end arrests for tax defaults. In a major overhaul, the Council scrapped arrest powers, raised prosecution thresholds, and announced faster automated refunds.
Karnataka's Stance on GST Enforcement
"The GST meeting went very well. Karnataka had two important points, and they have accepted both. One point was about criminal cases and arresting people for not paying GST. In Income Tax, there is a provision for this; we should follow that. It is not right for officers to unnecessarily arrest businessmen. Recover whatever money is due, but arrest is not right. ED-type action should be removed," he said.
According to the Chief Minister, nearly all states agreed with Karnataka's stance on eliminating harsh arrest protocols for tax defaults. A committee is set to be formed to address one of Karnataka's core proposals. Meanwhile, State Revenue Minister Krishna Byre Gowda has been entrusted with managing the third proposal.
Shivakumar also held a separate discussion with Union Finance Minister Nirmala Sitharaman regarding state fund allocations. "Except for one state, everyone else agreed. I said no to arrest; let us make a system for recovery. For the second point, they said they will form a Committee. For the third point, I have left the responsibility to Krishna Byre Gowda. They have given a lot of respect and gave some good inputs. I also spoke separately to the Finance Minister about our funds," said the Karnataka CM.
GST Council Approves Major Procedural Reforms
In a major shift from rate revisions, the 57th GST Council meeting concluded at Bharat Mandapam here, approving a sweeping package of enforcement and procedural reforms. The meeting, chaired by Union Finance Minister Nirmala Sitharaman, decided not to tinker with the existing GST rate slabs. The Council said rate-related matters will now be reviewed only once a year at a dedicated meeting to ensure greater policy predictability for industry. All structural overhauls approved will come into effect from April 1, 2027.
Relief for Taxpayers
In a significant relief for taxpayers, the Council has completely scrapped the power of GST officers to arrest individuals. It has also raised the monetary threshold for launching prosecution fivefold — from Rs 1 crore to Rs 5 crore. Further easing the penal provisions, the general penalty for offences where no specific penalty is prescribed has been slashed from Rs 25,000 to Rs 10,000, and minimum punishments have been removed. Courts will now decide on imprisonment or specific fines.
Streamlined Refunds and Credits
To ease working capital stress, the Council approved fast-tracked, automated refunds, under which businesses will receive 90 per cent of claimed refunds within 13 days. The timeline for officers to acknowledge refund claims has been shortened to 10 days from 15 days.
In another key move, businesses will now be allowed a refund on GST paid for plant and machinery, with the refund spread over 60 months starting next fiscal. Expanding the ambit of Input Tax Credit (ITC), the Council has allowed employers to claim ITC on GST paid for employee health and life insurance covers.
Compliance Eased for Small Businesses
For small businesses and e-commerce sellers, compliance and registration norms have been simplified. The Council also decided that no GST notice or proceedings will be initiated for tax dues of Rs 10,000 or below, and all pending notices below this threshold will be withdrawn. (ANI)
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