Prime Minister Narendra Modi on Monday, 5 October 2026 underscored that the forthcoming phase of Goods and Services Tax (GST) reforms will simplify compliance and improve the refund process, giving businesses greater confidence to invest and expand. The remarks came as Finance Minister Nirmala Sitharaman published a detailed article laying out the government's case for next-generation GST, ahead of the GST Council meeting on 7 October.

What Modi and Sitharaman Said

Modi, responding to Sitharaman's article, said the next phase of reform would 'strengthen the foundation for a Viksit Bharat.' Sitharaman, in a post on X, stated that next-gen GST is 'delivering the twin objectives of relief for taxpayers and greater momentum for our economy.' Her article argued that the reforms are expanding economic activity, strengthening revenues, and creating more opportunities for enterprises across India.

The Finance Minister outlined that the next reform phase will target five specific areas: registration, returns, refunds, dispute resolution, and the flow of input tax credit (ITC) — with the stated aim of reducing both the time and cost of compliance for taxpayers.

Rate Rationalisation and Revenue Performance

Sitharaman also highlighted GST collection performance and reported taxable supplies following the rate rationalisation that took effect on 22 September 2025. The government has pointed to these figures as evidence that simplification and revenue buoyancy can be pursued simultaneously — a key argument in its case for further reform.

Arrest Powers Under Section 69 May Be Removed

One of the more significant proposals likely to be taken up at the 7 October GST Council meeting is the potential removal of the stand-alone provision under Section 69 of the CGST Act, which currently empowers the Commissioner to authorise the arrest of a taxpayer under investigation for specified serious offences under Section 132. A senior official confirmed that misuse of this provision has come to the fore, prompting a review.

The proposal is part of broader decriminalisation suggestions by the GST Council's Law Committee, which comprises officials from both the Centre and states. The committee's reasoning, according to reports, is that on several occasions, failure to pay tax has not been deliberately intended — making criminal-level arrest powers disproportionate.

Under the current thinking, serious cases — involving fake invoicing, fraudulent input tax credit, and claiming fake refunds — would instead be pursued through criminal prosecution under the Bharatiya Nyaya Sanhita (BNS), rather than through GST-specific arrest powers. This would mean tax officials lose the ability to arrest a taxpayer during a GST investigation under Section 69.

Role of the GST Council's Law Committee

The Law Committee examines legal provisions under GST laws and recommends statutory amendments and clarifications to the full Council. Its decriminalisation proposals, if accepted at the October 7 meeting, could mark a significant shift in how tax disputes — and alleged fraud — are handled under the indirect tax regime. The committee's recommendations, however, require Council approval before they can be enacted.

What Comes Next

The GST Council meeting on 7 October is expected to deliberate on the Law Committee's decriminalisation package alongside the broader compliance-simplification agenda. Industry bodies and tax practitioners have long called for rationalisation of arrest and prosecution powers under GST, arguing that the current framework creates undue uncertainty for businesses operating in good faith. The outcome of the meeting will signal how far the government is willing to go in rebalancing enforcement with ease of doing business.