The Union Finance Minister, Nirmala Sitharaman, chaired the GST Council, which finalized a set of measures to ease compliance burden and cut down the regulations on businesses.
The key decisions included increasing the threshold for launches of prosecution under the Goods and Services Tax (GST) regime, from ₹1 crore to ₹5 crore. The transfer is designed to “ensure [tax-related] prosecutions are targeted at more serious matters. Before coming into effect, the recommendations made by the Council will need review and changes to the legal and regulatory frameworks.
The Council also agreed on amendments to the punishment system. The lower limit of punishment has been dropped and now courts have discretion to impose a fine, or imprisonment or a mixture of both, according to the circumstances.
Another method is to decrease the overall punishment that is imposed when a specific penalty is not detailed. The penalty has been reduced from ₹25,000 to ₹10,000.
Changes expected to give more clarity to taxpayers and businesses with compliance issues. The new policy would allow recovery actions, interest and proportionate penalties to continue to be imposed for taxpayer mistakes, and for late or untimely tax filing and payment, but the extended criminal prosecution policy would kick in at higher thresholds.
The decision is coming as businesses demand more streamlined tax procedures and lesser compliance costs. Industry organizations have been pressing government to take steps to enhance the ease of doing business in the GST regime repeatedly.
In a post meeting interaction with reporters, Sitharaman said that the lenders of all the Councils were not interested in any changes in the rate of the GST but only about fixing process related issues. The changes proposed aim to enhance the ease of compliance and improve the framework of GST to be more business friendly, without losing the mechanism for enforcement in the event of serious lapses.
The recommendations will be put into effect via the necessary amendments, notificiation and other law instruments.