GST decriminalisation ‘most significant’ institutional reform: CII

On October 8, the GST Council recommended the removal of arrest powers under the CGST Act, a fivefold increase in the monetary threshold for prosecution from Rs 1 crore to Rs 5 crore, narrowing of specified offences under Section 132, and rationalisation of imprisonment provisions. For businesses, particularly MSMEs and first-generation entrepreneurs, these decisions are significant as they reduce uncertainty, reputational risks, legal costs and management disruption associated with disproportionate criminal consequences, the CII said.

“This is one of the most consequential steps towards trust-based governance in recent years, particularly given the reach of GST across virtually every sector of the economy,” said Chandrajit Banerjee, director general, CII. “It signals confidence in legitimate enterprise and in the ability of modern tax administration to protect revenue through better information, technology and targeted enforcement.

Industry must recognise the significance of this change in regulatory philosophy,” Banerjee said. CII said that much of India’s next generation of economic reforms will require close cooperation between the Centre and states, particularly in areas such as land use, construction permissions, labour administration, utility connections, logistics and local regulatory approvals. “We need similar coordination and reform commitment across land, labour, construction, utilities and local permissions to improve the ease, cost and speed of doing business. This may well be among the most important lessons of the GST Council’s achievement,” Banerjee said.