GST Offences Under Rs 2 Crore Won’t Be A Crime? Govt Wants To Decriminalize Some GST Offences

By raising the threshold limit from Rs 2 crore to Rs 5 crore in tax evasion cases, the government is working on a proposal to decriminalise certain offences under the goods and services tax (GST) in order to promote ease of doing business.

A senior official said that “A proposal is under consideration to raise the threshold to Rs 5 crore for initiating criminal prosecution. The matter will be put up before GST Council soon”.

As we speak today, the GST evasion of Rs 2-5 crore attracts three years jail term. The same is one year jail term if the tax evasion is up to Rs 2 crore.

The government will make GST offences up to `5 crore compoundable and do away with the arrests and jail terms.

Decriminalize GST evasion

The GST investigation unit of the central board of indirect taxes and customs had advised field formations to not launch prosecution against offenders in cases where the amount of GST evasion or misuse of the input tax credit is less than Rs 5 crore.

Under the Section 132 under CGST Act, the illegal credit for GST evasion is criminalized.

Some of the provisions which are overlapping with the Indian Penal Code which need not be in the GST law are also being reviewed by the government.

Encourage Taxpayers by Decreasing Compounding Charges

In order to encourage taxpayers to compound their offences instead of going to litigation, the compounding charges for offences under GST would also be lowered.

Even though, the industry was asking to decriminalise offences involving more than Rs 5 crore, the government was not in favour of it. A higher threshold for prosecution could lead tax evasion and impact revenues, officials reckon.

Under GST Act, the amount payable for compounding of offences shall be 50% of the tax amount involved subject to a minimum of Rs 10,000. The maximum amount for compounding is 150% of the tax or `30,000, whichever is higher.