Financial expert Ajay Rotti on Thursday, 8 October 2026, praised the process-driven reforms recommended by the 57th GST Council, calling them a meaningful step toward ease of doing business and a more balanced relationship between tax authorities and industry. Speaking from New Delhi, Rotti highlighted several structural changes — including the curtailment of tax officers' arrest powers and the withdrawal of low-value tax demand notices — as evidence that policymakers have genuinely listened to industry concerns.

On Arrest Powers and Prosecution Threshold

One of the headline recommendations is the removal of tax officials' powers of arrest under GST and the raising of the prosecution threshold from ₹1 crore to ₹5 crore. Rotti argued the change restores appropriate jurisdictional boundaries.

'If there's a criminality involved in anything that you do with taxes like misuse or fraud, the IPC or the BNS takes its own course. Earlier, the tax officers also had the powers to arrest, and the police also got the powers to arrest. The tax officers' powers have now been curtailed, rightly so, because if there's criminality anywhere, the criminal law can take its own course,' he said.

Relief for MSMEs: Low-Value Notices Withdrawn

The Council has also recommended withdrawing notices related to tax demands of up to ₹10,000 — a move Rotti described as 'a great move' for small businesses. 'Taking out these low-value notices reduces the burden both on the taxpayer and on the GST department to track whether those penalties have been paid,' he noted. 'So that's again a good move for ease of doing business.'

This is particularly significant for micro, small and medium enterprises (MSMEs), which have historically faced disproportionate compliance costs relative to the value of the disputes involved. By clearing the backlog of minor demand notices, the reform could free up both administrative resources and business bandwidth.

Full Scope of Council Recommendations

The 57th GST Council has put forward a wide-ranging package of reforms. Key recommendations include: removal of arrest provisions under GST; raising the prosecution threshold from ₹1 crore to ₹5 crore; reduction in general penalty from ₹25,000 to ₹10,000; wider eligibility for input tax credit and refunds; further simplification of registration and compliance processes; faster refunds to improve working capital; and common standards for GST notices and proceedings.

Additionally, the Council has recommended measures for smoother movement of goods across states, intelligence-based and authorised interception of goods, simplified GST registration for small sellers on e-commerce platforms, and measures to facilitate the export of services.

Broader Significance

Rotti noted that the cumulative effect of multiple small changes signals a shift in institutional attitude. 'Multiple small changes announced show that the GST Council teams have been having their ears to the ground and have really heard the industry concerns,' he said.

This comes amid longstanding calls from industry bodies for a lighter regulatory touch on routine tax compliance, particularly for smaller firms. Notably, the reduction in general penalty — from ₹25,000 to ₹10,000 — and faster refunds directly address working capital pressures that businesses, especially exporters, have flagged for years. With GST collections remaining robust, the Council appears to have the fiscal headroom to absorb the administrative cost of these concessions.

Implementation timelines for the recommended changes are yet to be formally notified, and their full impact will depend on how quickly the states ratify and operationalise the Council's proposals.