The GST Council in its meeting on December 17 likely to discuss a proposal on decriminalisation of GST offences. It is also expected to take a call on two reports by Group of Ministers (GoM) – one related with online gaming, casinos & horseracing and other related with setting up of GST Appellate Tribunal.

“The thinking is to raise the threshold for declaring an offence criminal one and Council is expected to discuss a proposal on that,” a senior Government official said here on Monday. The government recently comes out with revised guidelines for compounding offences under Direct Taxes. Earlier, a similar arrangement was made in case of customs duty-related offences. Now, the plan is to go for decriminalisation of offences under GST

Raising threshold limit

The proposal is to raise the threshold limit for launching criminal proceedings under GST to ₹20 crore and also the property of offenders below the set threshold will not be attached. Currently, GST evasion of ₹5 crore or more attracts a jail term of 5 years. It is 3 years with a fine for offences involving evasion between ₹2-5 crore and 1 year in case of evasion amounting between ₹1-2 crore. In case of repeated offence, jail term could be 5 years. Also, the Act is so draconian that it sees both minor and wilful offenders under the same lens, which mainly hurts small businesses.

Officials say such drastic provisions will be discarded by abolishing the jail term below the threshold limit. Instead, the government will make GST offences up to ₹20 crore compoundable. “We are not interested in people into jail.  What we want is that if we can compound, if there has been a mistake on the part of a corporation or a person, let them pay the money with penalty and move on or compound the offence and move on,” the official said.

Once the Council approve the proposal, amendment in GST be required which can be done through Finance Bill. Provisions of the Indian Penal Code, the presence of which is not required in the GST Act, are likely to be verified and removed. For the new changes, the government would be mainly touching upon section 38, 83, 132, 133 among others and amend them accordingly after the GST Council gives its go-ahead.

Other agenda

Talking about other agenda, he said that GoM on GST Appellate Tribunal has already submitted the report while GoM on online gaming, casinos and horseracing is yet to do so. The second GoM has though concluded the meeting, but there is no consensus. Now, the GST Council will take a final call about rate for all three and value at which GST to be levied provided the GoM submitted the report before the meeting, he said.

The official informed that various suggestions have been received for lowering GST on premium for health insurance. At present the rate is 18 per cent and there is demand that when there is need for deep penetration, the rate should be lowered. “The GoM on rate rationalisation is looking into various suggestions and include its recommendation in the report,” he said. However, he did not give any time frame about when the final report will be submitted.