Decriminalisation of Goods and Services Tax Act is on the cards, which would give a big reprieve to small businesses in India, sources told businessline. In what could be a major overhaul of the GST Act in nearly six years after it came into effect, the government is likely to raise the threshold limit for initiating criminal prosecution against GST evasion and draw a clear distinction between minor offences and wilful evasion under the proposed new changes, the sources said. 

New changes

The threshold limit for launching criminal proceedings under GST will be raised to ₹20 crore and also the property of offenders below the set threshold will not be attached, as per the new changes to the GST Act being thought about, the sources said. 

This and more such laissez-faire proposals will be put up before the GST Council during the second week of November. Some of these recommendations have come from the GST investigation units of the Central Board of Indirect Taxes and Customs, the sources said.

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Currently, GST evasion of ₹5 crore or more attracts a jail term of 5 years. It will be 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. 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, the sources said. As a motivation for the assessees to opt for compounding rather than litigation, the penalty or levy will also be kept lower. Prosecution will only be initiated in extreme cases, where wilful evasion of GST and misuse of input tax credit can be established. 

Sections to be amended

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.