FISME Welcomes Proposed GST Decriminalisation Measures, Says Reforms Could Boost MSME Confidence

New Delhi, Nov 2 (KNN) The Federation of Indian Micro and Small & Medium Enterprises (FISME) has welcomed the GST reforms approved at the 57th GST Council meeting, saying the proposed changes could reduce compliance-related anxiety among micro, small and medium enterprises (MSMEs) and encourage formalisation.

FISME said the recommendations address several long-standing concerns of small businesses, including GST registration for eligible suppliers selling goods through e-commerce platforms, an opportunity to correct returns and a reduction in penalties.

The federation also highlighted the proposed changes to GST enforcement, particularly the removal of arrest powers under Section 69 of the Central GST Act and changes to prosecution provisions under Section 132.

Proposed Changes to Prosecution Provisions

Under the recommendations, the government has proposed removing Section 69, raising the prosecution threshold to Rs 5 crore and narrowing the scope of certain offences. The proposed changes also seek to give courts greater discretion in sentencing and focus provisions relating to fraudulent input tax credit claims on cases unsupported by the receipt of goods or services or valid invoices.

FISME said the changes could help build trust between tax authorities and small businesses by reducing the risk of disproportionate enforcement. Small enterprises often depend on external accountants for compliance, while proprietors remain responsible for errors and defaults, making uncertainty around enforcement a source of anxiety.

The federation noted that the proposals would not remove liability for tax defaults or eliminate prosecution in serious cases involving deliberate fraud and evasion. It said effective tax enforcement should be accompanied by safeguards against unnecessary disruption to genuine businesses.

It added that predictable and proportionate enforcement could encourage entrepreneurs to formalise operations, delegate accounting responsibilities and expand their businesses.

The recommendations will require the necessary legislative and administrative measures before becoming legally enforceable. Their impact will depend on the final amendments, implementation arrangements and clear guidance for taxpayers.

(KNN Bureau)