In a significant shift regarding tax enforcement, the GST Council has decided to scrap the arrest powers previously held by tax officers for specific administrative lapses. Under the new policy, taxpayers who fail to file returns on time, delay payments, or commit clerical errors will no longer face the threat of arrest. Instead, the council has mandated that these issues be resolved through a system of recovery, interest accrual, and proportionate financial penalties.

This reform aims to distinguish between genuine administrative mistakes and intentional tax evasion. By removing the threat of criminal detention for procedural delays, the council seeks to reduce the burden on taxpayers and streamline the compliance process. While the council has not provided a comprehensive list of which specific offenses remain subject to criminal investigation, the current directive clarifies that late filings and payment delays are now strictly civil matters. This move is expected to provide relief to businesses that have previously faced aggressive enforcement actions for minor technical oversights. The policy change reflects a broader effort to modernize tax administration and foster a more cooperative relationship between the government and the taxpayer base.