With an aim to avoid litigations and disputes due to GST offences, the center is planning to decriminalize small offenses and may avoid criminal prosecution in cases where the total evaded amount is less than Rs. 20 crores.
Decriminalisation of offences would give a big reprieve to small businesses in India. 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.
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.
The proposals will be tabled 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.
Currently, GST evasion of Rs. 5 crore or more attracts a jail term of 5 years. It will be 3 years with a fine for offences involving evasion between Rs. 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.
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